Proactively Controlling Risk

Our motivation behind developing ground breaking pre-trade risk controls is closely tied to the growing trend of direct market access and the potential risk arising from algorithmic trading tools. Eurex Clearing is a pioneer in introducing system features that help proactively safeguard the marketplace. We provide our Clearing Members with a set of tools that help them better control order flow for specific products and accounts.

These risk controls are part of our ongoing commitment to safeguarding the marketplace:

Advanced Pre-trade Risk Protection

An advanced pre-trade risk management service enables members to define individual risk limits for themselves and their associated trading members (NCMs). Depending on the severity of the limit violation and set parameters, staggered action is taken. Learn more

Maximum Order Quantity

Besides the already available maximum order quantities (On-Exchange, Futures Spread, Wholesale) with Eurex Release 10.0 (November 2007), we enabled our Clearing Members to define maximum order sizes per Non-Clearing Member on a product level. Learn more

Stop Button for Clearing Members

Although we have put robust pre-trade risk tools in place, unfortunately, emergency situations can occur. When they do, it's important for Clearing Members to be able to take immediate action to limit further exposure.

To arm Members for this eventuality, we provide our Clearing Members with a Stop Button that they can use to cut off Non-Clearing Members from the market.

When a "Stop" is used on a Non-Clearing Member the following occurs:

• All open orders and quotes are deleted
• All Block auction requests and quotes are deleted
• Open Wholesale as well as Give-ups/Take-ups cannot be approved by their counterparties

When a Clearing Member triggers a "Stop" it has the following implications for the affected Non-Clearing Member:

• Entry and modification of orders and quotes will be rejected
• Entry of Block Auction requests and quotes will be rejected
• Trade or position adjustments cannot be performed

The "Stop" will remain in effect until the Clearing Member releases the Member in question.

Stop Button for Non Clearing Members

Members will be able to trigger a "stop" action on specific traders, which will disconnect specific trader IDs from the marketplace. Triggering a "stop" action will make it impossible for the Trader ID to engage in any further trading activities. It is important to note that a "stop" action will affect all IDs that are part of a trader subgroup.

A "stop" action will set all trading-related Resource Access Levels (RALs) of the specified trader ID to zero for on-exchange orders and OTC trades.

Triggering a "stop" action will have the following implications for the affected trader subgroup:

• All open orders and quotes will be deleted.
• Entry and maintenance of orders and quotes will not be allowed.
• Entry of OTC transactions will not be allowed.
• Give-up/take-up processing will not be allowed.
• Entry of Block Auction Requests and quotes will not be allowed.

In case a trader is released, all specific trading RALs have to be re-set manually. Please note: Orders and quotes for a product in state FREEZE will not be deleted by stopping a trader.