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Becoming a Clearing Agent

Becoming a Clearing Agent

Existing clearing members are able to easily extend their current clearing licences to include the ISA Direct Model. If they are already an OTC IRS or Repo Clearing Member then they may also become a Clearing Agent for those markets by following the below steps.

Extending your existing licence
You will have to sign a new clearing agreement with Eurex Clearing and the Basic Clearing Member (BCM).

If you are pledging securities on behalf of the BCM then you will have to sign a new pledge agreement designed for the new ISA direct model.

Default Fund
It is the Clearing Agent's responsibility to post the default fund to Eurex Clearing on behalf of the Basic Clearing Member (the client).

The Default Fund requirement is determined by the highest single amount of the following components:

  • Default Fund minimum (which is EUR 1 million for banks, financial service providers, investment firms and insurance companies or EUR 100,000 for investment funds, insurance pools and pension funds), or
  • 7 percent of the 30 day initial margin requirement average, or
  • 7 percent of the 250 day initial margin requirement average.

Operational set up
The clearing agent can opt for various operational set ups.

The following requirements or business functions can be fulfilled either by the Basic Clearing Member (BCM) or the Clearing Agent (CA):

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, e.g. USD, GBP, JPY

Business Functions

  • Fulfilment of payment obligations (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

Whatever operational set up you decide upon between you and your Basic Clearing Member, you will agree the set up using the Clearing Agent Limitation Notice.