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Amendments to the FCM Regulations of Eurex Clearing AG

Release date: 10 Jan 2020 | Eurex Clearing

No. 004/2020 Amendments to the FCM Regulations of Eurex Clearing AG

Eurex Clearing Circular 004/20

1.    Introduction

This circular contains information with respect to the LSOC (Legally Segregated Operationally Commingled) service offering of Eurex Clearing AG (Eurex Clearing).

In the following, required changes of the FCM Regulations of Eurex Clearing AG (FCM Regulations) and the FCM Clearing Agreement are described and outlined in detail via the relevant attachments. 

The amended FCM Regulations and the FCM Clearing Agreement will come into effect on
3 February 2020.

2.    Required action

There are no required actions for the Participants. 

3.    Details 

The FCM Regulations and FCM Clearing Agreement will be amended as follows: 

 

A) Introduction of a process to ensure that bookings resulting from the charge of negative interest rates do not result in a reduction of US FCM customer funds on the relevant Cash Trust Account. 

 

B) Introduction of the right for Eurex Clearing to charge negative interest:

 

For a transparent process, in case Eurex Clearing determines to charge negative interest, a publication on Eurex Clearing’s website is required, as well as currently available benchmark interests need to be considered.

 

C) Clarification that Variation Settlement payments are considered in the calculation of the Difference Claim in case of a default of an FCM Clearing Member:

 

Despite of the default or insolvency of an FCM Clearing Member, Eurex Clearing remains obliged to pay Variation Settlements under those Transactions which are opposite the terminated Transactions of the defaulted FCM Clearing Member. 

 

D) Introduction of a right for Eurex Clearing to disclose the identity of FCM Clearing Members to investment agents:

 

Due to regulatory requirements, Eurex Clearing needs to be enabled to disclose the identity of FCM Clearing Members to Eurex Clearing’s Investments Agents. This amendment prepares the acceptance of US dollar as currency for initial margin payments, which is subject to final operational readiness and implementation of an investment scheme applying CFTC Rule 1.25. Eurex Clearing is currently in the process of finalization and will announce readiness for the acceptance of US dollar as initial margin currency with a separate Eurex Clearing circular.

 

E) Improvement of KYC process:

 

Eurex Clearing is obliged to thoroughly check all direct contractual counterparties (i.e. FCM Clearing Members), in particular with regards to funding of terrorist activities and money laundering (KYC). In order to improve the underlying process, a new requirement has been added, that direct contractual counterparties shall without undue delay provide all information required to Eurex Clearing, which Eurex Clearing may reasonably request at any time in order to comply with applicable laws, rules and regulations by its competent supervisory authorities. 

 

F) The description of the Swap Transaction Netting and Accumulation process will be clarified and aligned more closely with the operational handling by FCM Clearing Members.

As of the effective date, the full version of the amended FCM Regulations will be available for download on the Eurex Clearing AG website www.eurexclearing.com under the following link:

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.

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

Attachments: 

  1. Amended sections of Chapter I of the FCM Regulations of Eurex Clearing AG
  2. Amended sections of Chapter II of the FCM Regulations of Eurex Clearing AG
  3. Amended sections of the FCM Clearing Agreement

Further information

Recipients:All FCM Clearing Members of Eurex Clearing AG 
Target groups:Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination
Contact:client.services@eurexclearing.com
Web: www.eurexclearing.com
Authorized by:Dmitrij Senko