Becoming an ISA Direct (IDCM)/ISA Direct Indemnified Clearing Member (IDICM)*

Eurex Clearing requires proof of the applicant's capital adequacy. Proof is provided by scanned copy of the return the applicant would usually provide to its regulator, so providing evidence is a straightforward process. As such, members are required to prove capital-/own funds requirements according to the highest amount out of the following minimum or dynamic components:

Minimum component

^{** for Investment Funds, Mutual Funds, Insurance Pools, and Pension Funds capital requirements are based on their assets under management for which, in deviation of the above, a minimum of EUR 100 million is applicable.}

The total minimum requirement is aggregated over all clearing licenses i.e. if applying for Repo and OTC it would be EUR 50 mn + EUR 7.5 mn = EUR 57.5 mn.

Dynamic component

The dynamic requirement is represented by the higher amount out of
•    20 percent of the 30-day average of the Initial Margin requirements or 
•    20 percent of the 250-day average of the Initial Margin requirements.

It is the Clearing Agent's responsibility to post the default fund to Eurex Clearing with respect to the ISA Direct/ISA Direct Indemnified CM’s transactions. Contribution to the Default Fund depends on the relative risk exposure brought to the Eurex Clearing system by such ISA Direct/ISA Direct Indemnified Clearing Member.

As such, Clearing Agents are required to deposit the highest of the amounts as referred to under Default Fund.

The operational requirements depend on your agreement with your Clearing Agent/Indemnifying Clearing Agent. The following requirements or business functions shall be fulfilled by the Clearing Agent (CA)/Indemnifying Clearing Agent (ICA):

• Provision of the Default Fund Contribution
• Responsibility for participation in DMP
• For ISA Direct Indemnified Model only: Provision of indemnity (covering all liquidation/DMP costs occurring to Eurex Clearing that exceed the defaulting IDCM’s margin and default fund contribution in a default scenario of one its IDCM's)

The operational requirements are per default to be fulfilled by the CA/ICA based on agreements between the CA/ICA and ISA Direct Member (Indemnified Clearing Member) whereas the IDCM/IDICM can limit the CA/ICA for the following: 

Collateral infrastructure

• Pledged security account (not needed if using cash only)
• Cash accounts for margin payments dependent on the Clearing currency i.e. EUR, CHF or GBP Please see webpage for accepted payment banks 
• Optional cash accounts in further currencies that you wish to trade in, i.e. USD, GBP, JPY (OTC IRD only)

Business functions

• Transaction related payments (amongst others overnight margin calls, transaction and variation margin payments, excluding intraday margin calls)
• Intraday risk management (amongst others risk monitoring and intraday margin call)
• Delivery of securities margin collateral
• Trade and position management
• Delivery management (Repo Market and GC Pooling only)

• The IDCM/IDICM selects a Clearing Agent
• If desired, the IDCM/IDICM carries out testing to get familiar with the Eurex Clearing tools and procedures
• The IDCM/IDICM and Clearing Agent/Indemnifying Clearing Agent completes and provides the required documentation

Eurex Clearing will also need to carry out know your customer (KYC) checks. For further information click here.

Application for the Granting of a ISA Direct Clearing Member License
This is the  initial form to start the onboarding process.

ISA Direct Member Clearing-Agreement
This forms the legal basis of the relationships and obligations of the IDCM, CA and Eurex Clearing.

ISA Direct Pledge Agreement
This is only used if the IDCM/CA is pledging securities in order to meet margin requirement. It is essentially to ensure the enforceability of a pledge in a default situation. One pledge agreement covers all securities accounts.

Clearing Agent limitation notice
To confirm the operational set up you have agreed with your Clearing Agent, you and the Clearing Agent must sign the limitation notice. Please note, based on the responsibilities taken over from the Clearing Agent, additional documentation might be required.

Segregation Setup Sheet
This is used to define on the cash and securities accounts.

Static Data Form (OTC IRD only)
This form is used to define parameters for OTC IRS.