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Client Asset Protection
Client Asset Protection
As required by EMIR, clients of Clearing Members will have the option as to how their position and margin collateral (cash and securities) is held and posted by their Clearing Member at Eurex Clearing, depending on each individual client's needs. In the event of a Clearing Member's default all client positions with the defaulting Clearing Member may be transferred to another Clearing Member.
Greater transparency and legal certainty on the treatment of client positions and assets in the event of a Clearing Member default are critical success factors in achieving a sustainable segregation solution. Therefore Eurex Clearing was the first CCP globally to offer full legal and operational segregation. Today, we offer a comprehensive service that complies with the regulatory initiatives and also effectively meets the requirements for Client Asset Protection.
Our Client Asset Protection service has been structured for Clearing Member's clients to deliver the following benefits:
Eurex Clearing's solutions
Overview of Client Asset Protection models
* Current jurisdictions: Germany, England/Wales, France, Ireland, Luxembourg, Netherlands (RCs/NCMs from the Netherlands can use the ICM through a CM from Germany, England/Wales and France only).
Jurisdictions under review: Italy, Scotland, Spain and Switzerland.
**Individual Clearing Model for funds is planned for March 2013.
Potential losses from a Clearing Member's default are covered by the existing Eurex Clearing lines of defense. Segregated client collateral will be completely ring-fenced and will not be set-off with losses of a Clearing Member or other clients.
Specifics of the different models
We successfully launched the Individual Clearing Model in 2011, becoming the first clearing house in the world to satisfy NCM requirements for the highest level of segregation of portability. In 2012, we extended our ICM model to include the same legal mechanisms of title transfer, close-out netting and pledges to Registered Customers (RC). And at the beginning of 2013 we introduced our UK CASS compliant Omnibus Model for our U.K.-based Clearing Members to reflect the current market structures to allow CASS compliance for the segregation of customers and NCMs under the UK CASS rules. This was followed by the launch of the Multiple Account Client Model in April.
We will continue to further develop our Client Asset Protections solutions and extend them to further jurisdictions and entities such as buy side clients. It is our aim to create the maximum legal certainty for our customers. Eurex Clearing is taking a close look at relevant national insolvency and investment rules and backing them up with legal opinions. Our solutions will therefore be designed with a view to ensure compliance, also with upcoming regulatory initiatives.
Moreover, Eurex Clearing is working on further enhancements to improve the collateral management processes.
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