Eurex Clearing launches the first major element of its new Client Asset Protection Services
New “Individual Clearing Model” offers individual client segregation to ensure maximum protection and portability of client assets/ Upcoming European regulatory requirements of EMIR on segregation of clients’ and intermediaries’ assets already addressed/ Important contribution to increase market safety and integrity
Eurex Clearing, Europe’s leading clearinghouse, announced the launch of its “Individual Clearing Model”, the first major element of a new suite of industry leading client segregation services. The new service is the first segregation solution offered by a clearing house enabling full legal and operational segregation of all assets (positions and margin collateral) for its non-clearing members (clients with trading admission) at the clearing house level. The new model allows for collateral and positions to be transferred immediately in the event of a clearing member default, thus clients are protected and enabled to continue their trading activities.
The Individual Clearing Model responds to the increasing demand of buy-side firms for central counterparty (CCP) services. Through the new service, Eurex Clearing makes an important contribution to market safety and integrity and already offers a service which fulfils the planned regulatory requirements as specified in the published draft versions of the European Markets Infrastructure Regulation (EMIR). Eurex Clearing is the first CCP globally to offer full legal and operational segregation across all cleared markets.
The new service will be offered in addition to the existing Eurex Clearing model. Eurex Clearing will also launch a so-called Omnibus Model, offering segregation of client assets in an omnibus account with higher operational efficiency and flexibility for the clearing member. The three different levels of protection enable clearing members to offer tailor-made access to Eurex Clearing and provide choice for clients.
“Maximum legal protection and immediate portability of client assets are at the heart of the value proposition for CCP clearing”, said Thomas Book, Eurex Executive Board member responsible for clearing. “In close collaboration with our participants, we have developed a unique offering of flexible alternatives for how client positions and assets can be held at Eurex Clearing, depending on clients’ individual protection needs.”
Eurex Clearing’s new service will be optional and available for all its listed markets. The next step will be the extension to clients without trading admission and to the future Eurex OTC Clear offering once this has been launched.
Eurex Clearing’s strategic agenda includes two further major initiatives focusing on market participant needs and safety for OTC derivatives. As already announced, Eurex Clearing plans to expand its Eurex OTC Clear service to include OTC-traded interest rate and equity derivatives. Second, Eurex Clearing plans to introduce a new risk methodology for the clearinghouse, which will be portfolio-based rather than instrument focused as in many current CCP risk management approaches. The new portfolio-based risk methodology will allow Eurex Clearing to offer cross-margining between listed derivatives and OTC interest rate swaps and equity derivatives, offering buy-side and sell-side firms significant margin and collateral efficiencies.
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