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Porting under LSOC

Porting under LSOC

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General information

In the context of Eurex Clearing’s status as a Derivatives Clearing Organization ("DCO") for the clearing of Swaps for futures commission merchants ("FCMs") having their principal place of business  in the U.S., Eurex Clearing offers an LSOC style (Legally Segregated Operationally Commingled) client-clearing framework in compliance with CFTC Part 22 Regulations for FCMs that clear client business.

Eurex Clearing offers two different versions of the LSOC model: "LSOC without Excess" as well as "LSOC with Excess". For both models, Eurex Clearing offers the transfer of FCM Client Transactions (including Eligible Margin Assets) to a new FCM Clearing Member ("Replacement FCM Clearing Member") in case Eurex Clearing issued a Declaration of Termination with respect to the relevant FCM Clearing Member. 

Upon the issuance of the Declaration of Termination with respect to a FCM Clearing Member, the following applies:

  • The clearing of new Own Transactions of the FCM Clearing Member and all FCM Client Transactions of all FCM Clients of the FCM Clearing Member is suspended, and 
  • the payment of Variation Settlement amounts to the Affected FCM Clearing Member with respect to all Own Transactions of the FCM Clearing Member and all FCM Client Transactions of all FCM Clients of such FCM Clearing Member is suspended. 

Further, Eurex Clearing AG may separately for each FCM Client exercise one of the following rights:

  • its right to treat FCM Client Transactions under the relevant Netting Set as if they are terminated by issuing an FCM Client Declaration of Termination and to calculate the Difference Claim with respect to such Netting Set, or 
  • transfer all FCM Client Transactions under the relevant FCM Client Netting Set (including the relevant Eligible Margin Assets) to a Replacement FCM Clearing Member. 

Eurex Clearing will use all reasonable efforts to transfer the FCM Client Transactions (including the relevant Eligible Margin Assets) to a Replacement FCM Clearing Member before it issues a FCM Client Declaration of Termination with respect to the relevant FCM Client Netting Set. 

Any action Eurex Clearing may take regarding the liquidation or porting of FCM Client Transactions will be taken in Eurex Clearing's reasonable discretion and in accordance with the provisions in the FCM Regulations and the FCM Default Rules and in compliance with the Commodities Exchange Act, CFTC Regulations and (as applicable) the U.S. Bankruptcy Code and related CFTC Part 190 Regulations.

Eurex Clearing AG
Group Client Services, Trading & Clearing and Cash Market

T +49-69-211 1 17 00

 

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