A Liquidation Group-specific auction process is a major component of our Default Management Process, whereby different auction formats have been defined for different Liquidation Groups.
We provide all auction participants with the relevant auction portfolio, and inform them of the applicable bidding window, during which auction prices can be entered. The timeframe during which Clearing Members can price the portfolio is expected to last between a few hours up until a full day. As bond auctions are expected to be performed on an ISIN-by-ISIN basis, the pricing window per auction is envisaged to be between 30 minutes and 1 hour. For any auction, the applicable timeframe is communicated by us at the beginning of the auction.
For any auction, we provide all auction participants with log-in credentials to a web-based auction tool (i.e. the Prisma Auction Tool), which is used for the auction process. Learn more via our detailed tutorials.
Who has to participate in an auction
Generally, auction participation is mandatory only for those Clearing Members, who hold a clearing licence for all products comprised in the relevant auction portfolio, and who are capable both from a risk and an operational perspective to process the portfolio.
DC Market Participants and Disclosed Clients or other clients are not obliged to participate in an auction, but are welcomed to do so on a voluntary basis. DC Market Participants and Disclosed Clients and other clients can only participate with permission of their Clearing Member. When considering whether or not a Clearing Member has fulfilled its bidding obligation, DC Market Participants' and Disclosed Clients' and other clients' bids are considered as prices provided by the Clearing Member.
If two or more auction participants provide the same price, the price which was provided first prevails over all other equivalent prices.
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Best Practices for Auctions in a Default Scenario
Watch our series on Risk Management. Marcus Addison, head of the Default Management team at Eurex Clearing deep dives into the details of auctions. Learn how auctions and hedging activities are interlinked and why the auction format at Eurex Clearing is so successful.
