On Mar. 22, EUREX Clear proposed amendments to clearing conditions
EUREX Clear consulted on amendments to its clearing conditions regarding introduction of concept of clearing capacities with provision to allow EUREX Clear to assign clearing capacities to clearing members per strict requirements in default management process.
Details
Clearing capacities are a composition of product types with comparable product properties falling under the same clearing license as determined by EUREX Clear.
A clearing capacity is a notion to indicate which products a clearing member and exchange member is able to trade and clear; for a clearing member, EUREX Clear initiates a default management process to balance the clearing house after default.
The default management process is conducted on the basis of liquidation groups.
As EUREX Clear margin methodology grants margin offsets for positions within same liquidation group, default management process is also performed based on liquidation groups, so the terminated positions of the defaulted clearing member are liquidated within such liquidation groups via independent trades/default management auctions.
The counterparty to an independent trade or, for a default management auction, the auction winner, can only take over auction portfolio if the clearing member has clearing capacities for all transactions forming part of relevant auction portfolio assigned.
To facilitate the establishment of the new transactions between EUREX Clear and the auction winner, the proposed amendments to the clearing conditions introduce a right for EUREX Clear to assign clearing capacities during the default management process.
In order to protect the interests of the clearing members, the entitlement by EUREX Clear to assign a clearing capacity will be conditional upon strict requirements.
An assignment of additional clearing capacities can only occur if relevant clearing member fulfils all clearing capacity requirements, and can comply with any specific settlement requirements, reporting duties or applicable tax-related requirements.
Proposed Amendments
Amendments to chapter I, part 1, number 2.1.1; and part 1, number 7.5.3(3)(viii).
Clearing members, ISA direct clearing members, disclosed direct clients, vendors, other affected parties should take clearing conditions amendments into consideration.
Effectiveness
The consultation ends at the end on Apr. 22, 2024; planned effective date of these amendments is Jun. 3, 2024, depending on the outcome of the consultation.
Mar. 28, 2024 EUREX Clear CFTC Certification
On Mar. 28, 2024, EUREX Clear submitted certification to CFTC re proposed rule amendments; planned effective on Jun. 3, 2024, depending on consultation outcome.
Apr. 2024 Clearing Conditions Amendments Made
On Apr. 29, 2024, EUREX Clear reported it received no comments that led to further changes/amendments of Special Provisions of the Clearing Conditions, no requests for application of prolonged notification period; thus all proposed changes in effect Jun. 3.
In circular 021/24, EUREX Clear proposed changes/amendments to clearing conditions.
Introduced concept of clearing capacities, with provision to allow EUREX Clear to assign clearing capacities to members under strict rules in default management process.
Clearing members, ISA direct clearing members, disclosed direct clients, vendors, other affected contractual parties should take changes to the clearing conditions and FCM regulations into account; amended clearing conditions available as of Jun. 3, 2024.
