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28 Sep 2020

Eurex Clearing

Amendments to the Clearing Conditions of Eurex Clearing AG

Eurex Clearing Circular 077/20

1.    Introduction

This circular contains information with respect to the service offering of Eurex Clearing AG (Eurex Clearing) and introduces amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions) regarding the following topics:

A.  Amendment of prerequisites to be fulfilled for the granting of the Specific Repo License – exclusion of small non-financial entities from the Specific Repo License

B.  Representation by Clearing Members with regards to Eurex Clearing’s offering of clearing services under the Ontario Securities Act

C.  Amendments to the Clearing Conditions regarding profit handling resulting from the failure to open KOSPI 200 derivatives positions on the Korea Exchange (KRX)

D.  C7 Release 7.0 - related amendments to Chapter II of the Clearing Conditions 

The amendments under A. to C. will become effective as of 2 November 2020, the amendments under D. will become effective as of 23 November 2020.

2.    Required action

There is no action required for the Participants.

3.    Details

A.  Amendments of prerequisites to be fulfilled for the granting of the Specific Repo License

Eurex Clearing amends the prerequisites to be fulfilled for the granting of the Specific Repo License. If the applicant for a Specific Repo License is a non-financial counterparty as defined in Art. 3 (4) Regulation (EU) 2015/2365 on transparency of securities financing transactions (“SFTR”), the applicant’s balance sheet dates shall exceed the limits of at least two of the three criteria laid down in Art. 3 (3) of Directive 2013/34/EU on the annual financial statements.

To reflect the changes, the following provision of the Clearing Conditions will be amended effective as of 2 November 2020, as outlined in Attachment 1:

  • Chapter IV Part 3 Number 3.1 (5)

B.  Representation by Clearing Members with regards to Eurex Clearing’s offering of clearing services under the Ontario Securities Act

Based on a permanent exemption order issued by the Ontario Securities Exchange, Eurex Clearing is offering clearing services to Ontario-based Clearing Members and their clients. For the clearing of OTC Derivative Transactions relating to Undisclosed Clients and Indirect Clients domiciled in Ontario, the following limitations apply and have been incorporated to the legal framework by adding a respective provision. Pursuant to this provision, the Clearing Member represents to Eurex Clearing that it will not clear OTC Interest Rate Derivative Transactions for 

  • any Undisclosed Direct Client that is domiciled in Ontario (Canada), 
  • any Indirect Client of a Disclosed Direct Client that is domiciled in Ontario (Canada) and 
  • any Indirect Client that is domiciled in Ontario (Canada) of any Direct Client. 

To reflect the changes, the following provisions of the Clearing Conditions will be amended effective as of 2 November 2020, as outlined in Attachment 2 and in Attachment 3:

  • Chapter I Part 1 Number 1.15
  • Appendix 1 

C.  Amendments to the Clearing Conditions regarding profit handling resulting from the failure to open KOSPI 200 derivatives positions on the Korea Exchange (KRX)

Each Clearing Member having open positions in Eurex Daily Futures Contracts on KOSPI Derivatives has to re-open such positions on the next business day at the latest 40 minutes before the start of trading on KRX. 

In case a Clearing Member fails to re-open such positions on the KRX, Eurex Clearing re-opens the positions on behalf before start of trading and closes the respective position immediately after start of trading at KRX. The proposed changes to the Clearing Conditions, seek to amend the handling of potential profits resulting from the above described process.

To reflect the changes, the following provisions of the Clearing Conditions the will be amended effective as of 2 November 2020, as outlined in Attachment 4:

  • Chapter II Part 2 Number 2.15.4 (2)

D.  C7 Release 7.0 - related amendments to Chapter II of the Clearing Conditions

Eurex Clearing will extend the transaction duration (lifetime of a transaction) for Eurex Transactions. Eurex Clearing will permit transaction adjustments with respect to Eurex Transactions executed on the respective Business Day and the five subsequent Business Days instead of the three subsequent Business Days. 

To reflect the changes, the following provisions of the Clearing Conditions will be amended effective as of 23 November 2020, as outlined in Attachment 5:

  • Chapter II Part 1 Numbers 1.3.2.(7) and 1.3.3.(2)

As of the respective effective dates, the full version of the amended Clearing Conditions will be available for download on the Eurex Clearing website www.eurexclearing.com under the following link:

Rules & Regs > Clearing Conditions

Unless the context requires otherwise, terms used and not otherwise defined in this circular shall have the meaning ascribed to them in the Clearing Conditions or FCM Clearing of Eurex Clearing AG, as applicable.

The changes and amendments to the legal framework of Eurex Clearing AG published by this circular are deemed accepted by each affected contractual party of Eurex Clearing AG, unless the respective contractual party objects by written notice to Eurex Clearing AG within the first ten (10) Business Days after publication. Any ordinary right of Eurex Clearing AG to terminate the respective contract (including a Clearing Agreement, if applicable) shall remain unaffected.

Attachments: 

  • 1 – Chapter IV Part 3 Number 3.1 (5) of the Clearing Conditions
  • 2 – Chapter I Part 1 Number 1.15 of the Clearing Conditions
  • 3 – Appendix 1 to the Clearing Conditions
  • 4 – Chapter II Part 2 Number 2.15.4 (2) of the Clearing Conditions
  • 5 – Chapter II Part 1 Numbers 1.3.2.(7) and 1.3.3.(2) of the Clearing Conditions


Further information

Recipients:

All Clearing Members, Basic Clearing Members, Disclosed Direct Clients of Eurex Clearing AG and vendors

Target groups:

Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination

Contact:

client.services@eurexclearing.com

Web:

www.eurexclearing.com

Authorised by:

Jens Janka