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Collateral processing takes place in a straightforward manner. The individual steps take place in the following sequence:
- The Clearing Member announces the planned provision of cash collateral to Eurex Clearing.
- Eurex Clearing debits the announced amount from the deposited account of the respective payment infrastructure.
- As soon as the payment has been received, the amount will be credited to the Member as margin and henceforth considered in intraday margining and batch processing.
- In order to release the deposited cash collateral, the Clearing Member announces the respective instruction to Eurex Clearing.
- Eurex Clearing transfers the respective amount to the deposited account of the respective payment infrastructure (only if the Clearing Member's remaining collateral is sufficient).
Additionally, cash collateral can be provided by the usage of the permanent cash balance
- To meet the Clearing Members requirements to efficiently manage deposited cash collateral, Eurex Clearing offers an enhanced service for the handling of cash collateral.
- With the “Permanent Cash Balance” functionality, Clearing Members are enabled to maintain their permanent cash balances via the Collateral Pool Overview window.
- The Permanent Cash Balance represents the requested permanent cash holding in each individual currency accepted at Eurex Clearing and might lead to a mandatory cash call or withdrawal on the next day. This is independent from an under- or over-collateralization.
- Late USD margin call amounts can be released automatically to registered accounts.
- Clearing Members are able to optimize/reduce any cash pledged to Eurex Clearing by instructing via this facility to refund any surplus funds not required to cover margin requirements.
- Report CD042 (Daily Settlement Statement) shows the overnight collateralization with the Permanent Cash Balance values, whereas report CD200 (Security Movement and Coverage) shows the deposited values.
Permanent Cash Balance for Segregated Clients
- For segregated collateral pools (i.e. type “Omnibus Segregated” and “Fully Segregated”) it is not possible to use the Permanent Cash Balance (PCB) to maintain the balance on the collateral pool. All cash deposited in a segregated pool remains until it is requested to be withdrawn by the CM.
- Therefore, the cash in the segregated pools will not be automatically returned to the Clearing Members on the next day in the morning (based on the prior end-of-day processing).
- However, Clearing Members have access to this functionality in the system for the segregated collateral pools, but the values entered for the PCB functionality are ignored and no booking (i.e. deposit or withdrawal) is initiated by the system. Therefore, all cash remains in the segregated pools until it is withdrawn by the Clearing Member, regardless of the values entered for the PCB.
- For the segregated collateral pools, Clearing Members are able to perform cash deposits and withdrawals only as a standard procedure in the Eurex @X-tract Clearing GUI, through the Collateral Transaction Entry window.
Deposits of securities
- Members can inquire as to the acceptability of any given security on the Collateral Security Information window.
- The Clearing Member debits the securities directly within the system of the relevant CSD (Clearstream Banking AG Frankfurt (CBF) or SIX Securities Services) to the relevant pledged account.
- These deposits will be credited near-time. Clearing Members will receive an up-to-date overview of their pledged securities through the new Collateral Transaction Overview window. To receive this information they must subscribe to the respective broadcast stream ("L").
- In the event that a deposit is unacceptable, Eurex will now instruct a deposit reversal (back to the Member's main account) near-time.
Withdrawal of securities
- Initial withdrawals are made using the Security Collateral Transaction Entry (SCTE) window. Once confirmed by Eurex Market Supervision that margins will be met without the securities requested, there will be an immediate transfer from the pledge account into the Member's main account.
- This migration does not concern XEMAC participants. The present processes for booking and withdrawal of collateral will remain unchanged.
- Should a withdrawal request lead to an under-collateralization in the Member's account, the transfer of the requested securities will be postponed until the next business day or until the proper amount of funds are in the account to fully fund the margin requirements.
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