The primary component of the default management process (DMP) are auctions for the particular liquidation groups, which enable Eurex Clearing to transfer risk in bulk to Clearing Members willing to absorb. Auctions are generally held as multi-unit auctions. The number of units is decided on a case-by-case basis and will therefore be determined depending on the current market situation.

Each auction is carried out with respect to a specific liquidation group, parts of a specific liquidation group or a combination of liquidation groups, as determined by Eurex Clearing upon recommendation of the respective Default Management Committee (DMC). The auction process starts with an invitation by Eurex Clearing. Auction invitees will receive an email notification from Eurex Clearing which will include the link to a web-based auction tool and instructions how to participate.

Eurex Clearing will inform every auction participant about the minimum amount of auction units it is obliged to submit a bid for. Such minimum amount of auction units relate to the relative size of the Clearing Member in respect to the total margin requirement of the Liquidation Group. When the auction takes place auction participants are asked to enter their bids within a predefined time window, of which they are informed when receiving the positions for pricing. The bids are validated to be economically reasonable and acceptable for Eurex Clearing. The expected time permitted by the Clearing House to price the liquidation depends on the size and complexity of the liquidation group and on the advice from the Default Management Committee.

Upon Eurex Clearing’s invitation auction participation is mandatory. With the permission of a Clearing Member, clients, Non-Clearing Members and Registered Customers may also participate in auctions.