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Porting

Porting

Overview of content

Client porting process overview

In case of a termination of a Clearing Member, Eurex Clearing informs all market participants about the Porting Period in which certain requirements must be fulfilled to enable porting. 

Upon the publication of the Porting Notice, all Direct Disclosed Clients (DCs) may use the Election Notice to provide their choice to Eurex Clearing:

  • OSA and ISA Clients may opt to transfer to a Replacement Clearing Member or close-out (termination)
  • ICM Clients may opt to transfer to a Replacement Clearing Member, become an Interim Participant or close-out (termination).

Undisclosed Direct Clients (UDCs) that are part of the same Transaction Account must port together; they all need to unanimously elect the Replacement Clearing Member as their new Clearing Member. Please contact your Clearing Member for further information.

Prior to default, the Clearing Member may designate a back-up Clearing Member for each Direct Client Account. The designation as a back-up Clearing Member does not impose any obligations to become the new Clearing Member in case of the termination of the Clearing Member.

 

Porting Units

Transaction Accounts Groups are also referred to as "porting units". The following set-ups can be ported ("porting units"):

Client typePorting OptionTransferTo consider:

Disclosed Direct Client (DC)

Each DC can be ported individually, irrespective of the clearing model. All client accounts of the DC will be ported together with the DC.

Porting of the DCs and its clients' transactions as well as the allocated collateral 

ISA/ICM

  • Specific collateral of the client in a separate collateral pool
  • Any excess collateral in the collateral pool is ported or returned to the individually segregated client.

OSA

  • Allocated collateral from respective collateral pool may not be the specific collateral provided by the client to the Clearing Member.
  • Any excess collateral in the collateral pool will not be ported but provided to the insolvency administrator.

Undisclosed Direct Clients of the CMNOSA Direct Clients and their clients (indirect clients) can be ported together. Porting of the clients' and its clients' transactions as well as the allocated collateral up to the total margin requirement of the relevant Transaction Accounts Group
All clients in one OSA collateral poolAll clients of one collateral pool can port together to the same (identical) Replacement Clearing Member.Porting of all transactions as well as the total collateral of the pool (incl. any excess)
  • Allocated collateral from respective collateral pool may not be the specific collateral provided by the client to the Clearing Member.
  • Excess collateral in the collateral pool will be ported.

Porting Period

The Porting Period starts with the occurrence of the Insolvency Termination Event of the Clearing Member or the publication of the Porting Notice and expires the next business day following the default at 13:00 CET. If a porting unit wishes to port its segregated transactions and allocated collateral to a new Clearing Member, the prerequisites ("Porting Requirements") have to be fulfilled by 13:00 CET on the business day following the default. Under certain circumstances, Eurex Clearing may extend the Porting Period at its own discretion.

In addition to the required activities that need to be fulfilled and forms/documents that need to be submitted during the Porting Period, the likelihood of a successful porting also depends on the compatibility of the Replacement Clearing Member's and Disclosed Direct Client’s infrastructure and set-up in the Eurex Clearing systems.

Porting to a Replacement Clearing Member

If, at or prior to the end of the Porting Period, Eurex Clearing determines that all Porting Requirements of a specific porting unit are fulfilled, Eurex Clearing will send out a confirmation to the Replacement Clearing Member(s) and the affected Direct Disclosed Clients stating that the Porting Requirements are fulfilled and that porting will take place.

The porting of the client transactions is facilitated by an assumption of contract under OSA and ISA and by close-out and re-opening under ICM. Any outstanding obligations (i.e. cash payments, Margin, Variation Margin) by the Defaulted Clearing Member under these transactions towards Eurex Clearing must be provided by the Replacement Clearing Member.

In addition to the fulfilment of the Porting Requirements, the Replacement Clearing Member must provide documentation as in the case of a regular Clearer Change to enable the technical set-up of the clients in its Eurex Clearing environment.

Close-out

If any of the Porting Requirements of a porting unit are not fulfilled within the Porting Period or a Disclosed Direct Client has opted for close-out, the respective own transactions and the indirect client related transactions of this porting unit will be handled within the standard Default Management Process. Close-out netting will take place and the respective Difference Claim for the Direct Client including clients’ transactions and collateral will be calculated.

If in the case of omnibus segregation there is a positive Difference Claim for a porting unit, Eurex Clearing may return cash and/or non-cash collateral that have been delivered to Eurex Clearing as Margin to the Disclosed Direct Client following the conclusion of the Default Management Process. Otherwise, any payment will be provided to the insolvency administrator for the account of the respective clients of the Defaulted Clearing Member. If Eurex Clearing is required to cover a negative Difference Claim with actually delivered securities, allocated securities will only be liquidated in an amount to recover the respective negative Difference Claim. On request any remaining allocated securities pledged as collateral will be transferred to the Disclosed Direct Client or otherwise released to the insolvency administrator indicating for which porting unit it was allocated.

If in the case of the individual segregation there is a positive Difference Claim, Eurex Clearing may return cash and/or non-cash collateral that have been delivered to Eurex Clearing as Margin to the individually segregated client following the conclusion of the Default Management Process.

Eurex Clearing is entitled to set-off any shortfall of a Difference Claim against the Clearing Member for client business against any Difference Claim owed to the Clearing Member for proprietary business, but not vice versa.

Interim participation for ICM clients

To reduce the time pressure to find a Replacement Clearing Member and to ensure orderly markets, an ICM Client has the possibility to become an Interim Participant (IP) for a limited period before the transactions and collateral are finally transferred to a new Clearing Member. The transfer period can last up to five business days (starting at Termination Date) and may be extended by Eurex Clearing. 

The Interim Participant will only be established if it has provided all outstanding payments related to the transactions re-opened, sufficient coverage for any margin shortfall and coverage of the Default Fund Contribution for the transfer period.

The Interim Participant is assigned to a technical Clearing Member ID in the Eurex Clearing system. The Interim Participant needs access to the EurexOTC Clear GUI and the Common Report Engine in case it is an OTC IRS ICM Client and to the C7 Clearing GUI and the Common Report Engine in case it is a Eurex ICM Client.

During the Interim Participation, the Interim Participant may only execute trades on a restricted basis as outlined in the Clearing Conditions; trading on cash markets is not allowed. There will be no settlement of cash market transactions during the interim period.

Daily payments for variation margin, premium margin and margin calls, which are payable by the Interim Participant to Eurex Clearing, need to be transferred by the Interim Participant into the cash account advised by Eurex Clearing within the standard deadlines.

Daily payments, which are payable by Eurex Clearing to the Interim Participant, are generally held on deposit with Eurex Clearing and used to offset any future payments to Eurex Clearing. The Interim Participant can request the payment of the amount on deposit to the account provided on a case-by-case basis.

If the Interim Participant would like to provide additional security collaterals or would like to replace other collaterals, the Interim Participant delivers the securities free of payment into the CBF account advised by Eurex Clearing.

For intraday margin calls issued in USD after the EUR payment cut off time, the USD cash collateral will be released on request (provided sufficient coverage is available) or transferred to the new Clearing Member.

In case of an intraday shortfall related to the transactions of the Interim Participant, a margin call will be issued against the Interim Participant which has to be met within the usual deadlines.

If the Interim Participant does not fulfil its obligations during the interim period, Eurex Clearing can suspend it with immediate effect and start the Default Management Process. The same happens after the interim period has elapsed if no new Clearing Member was found. Eurex Clearing does not have the power to enforce a transfer to a non-defaulting Clearing Member. The Interim Participant is the legal owner of all its transactions during the transfer period. 

 
 
 
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