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ESMA: Individual client segregation 'must identify specific assets'

Release date: 09 Aug 2013 | Eurex Clearing, Eurex Group

ESMA: Individual client segregation 'must identify specific assets'

On 5 August 2013 the European Securities and Markets Authority (ESMA) finally provided clarity that individual client segregation (see article 39(3) of the European Markets Infrastructure Regulation (EMIR)) requires that the actual assets of the client are segregated and available for porting. Both CCPs and Clearing Members are required under EMIR to offer individual client segregation. ESMA further stated that models which merely segregate the value of collateral due to the accounts of clients, 'do not meet the requirement to offer individual client segregation' resolving an area of uncertainty in the market.This confirms that Eurex Clearing's Individual Clearing Model is in line with the requirements of individual segregation according to EMIR.

Eurex Clearing's Individual Segregation was launched in 2011 and offers EMIR compliant individual client segregation through:

  • individual client position accounts and segregation of the client's actual assets
  • 'highly likely' porting options
  • compliant with industry standard client clearing documentation
  • efficient collateral handling through asset tagging, or alternatively full physical segregation at the CSD level
  • broadest range of eligible collateral globally
  • flexible collateral management allowing collateral transformation and
  • beneficial risk weighting under proposed capital rules.

The model also eliminates fellow customer risk, replacement risk and liquidation risk for buy-side clients. The model will provide direct delivery features mitigating transit risk.

Richard Wilding

T +44-20-78 62-72 79