Risk & Margining

The clearing system of Eurex Clearing AG, with its integrated safety and control mechanisms, guarantees fulfillment of every contract executed on the Eurex Exchanges, Eurex Bonds and Eurex Repo or relevant equities.

In order to ensure this high degree of security, Eurex Clearing AG protects itself against the risk of default by any of its members. The mainstay of this security system is margin, i.e. the funds or securities which must be deposited by Clearing Members as collateral for a given position. The amount specified for such should not be excessive, but it also may not be set at a level that is too low. Oversecuring a position would tie up liquidity of the exchange participant unnecessarily, while an undersecured position could represent a potential threat to the guarantee of contract fulfillment.

Throughout this process, not only the losses calculated on the basis of current market prices, but also potential future price risks must be covered so that no collateral shortfall arises prior to the next calculation of margin requirements. The job of an efficient margin system is to find the right measure of protection for all market participants without causing an undue burden on anyone of them and unnecessarily blocking liquidity.

The basic principles and the calculation methods to determine Eurex margin requirements are elaborated in detail in the Eurex Risk-based Margining brochure.

Name	Effective Date	File Size	File
Risk-based Margining	Jan 2003	~500 kB