Overview

In light of recent financial market turmoil, politicians, regulators, market participants and many others recognize the growing importance of central counterparties (CCP) in reducing systemic risk. Central clearing services are the most effective way to mitigate existing counterparty risk in OTC derivatives and to improve market transparency. At Eurex Clearing, we believe that strengthening financial market integrity for the European market is of common interest to all stakeholders because this will also contribute to improved market stability on a global scale. For this reason, Eurex Clearing supported the implementation of the industry self-commitment given by nine major market participants to the European Commission to use a European CCP for European CDS products by July 31, 2009.

In July 2009, Eurex Credit Clear, the European OTC Clearing solution for Credit Default Swaps, was therefore launched.

Highlights of Eurex Credit Clear are:

• Comprehensive product scope: Covering both Index and Single Name CDS
• Efficient functional design: Full STP integration into DTCC Deriv/SERV Trade Information Warehouse
• State-of-the-art risk management: Risk solution specially designed for CDS
• Industry partnership: Customer governance concerning product and service scope for CDS as well as economic participation

Eurex Credit Clear: the European OTC Clearing Solution for CDS

For Eurex Credit Clear, Eurex Clearing has developed a state-of-the-art risk management model. Implementation has been supported by deploying proven application modules from Calypso Technology Inc., a leading provider of risk solutions for credit derivatives. Eurex Credit Clear was designed in close consultation with users and envisions customer governance of products and functionalities as well as sharing the economics with the industry. Eurex Credit Clear is interlinked with the Depository Trust & Clearing Corporation (DTCC) Trade Information Warehouse to deliver straight-through-processing and a seamless integration into existing OTC market infrastructure. The initial product scope covers a European CDS product suite of iTraxx® indices and selected single name iTraxx® index constituents. In a next step further European single names will be added to provide full coverage of the iTraxx® benchmark index constituents.