Securities clearing: Introduction of C7 Securities Clearing Service, Release 1.0

1. Introduction

With this circular, Eurex Clearing announces the introduction of the new Securities Clearing platform “C7 Securities Clearing Service” (C7 SCS), Release 1.0, on 28 June 2021.

As a part of Eurex Clearing’s strategic roadmap, Eurex Clearing proceeds with the migration of Equity and Bonds Clearing to the C7 architecture. The new securities clearing system C7 SCS will be introduced for all transactions involving CCP-eligible instruments concluded at the Frankfurt Stock Exchange (MICs: XETR and XFRA) and for all transactions concluded at Eurex Deutschland (MIC: XEUR) that result in securities transactions.

With this migration, Eurex Clearing will apply Trade Date Netting (TDN) as the main supported netting model in C7 SCS. The current netting model Actual Settlement Day Netting (ASDN) for cleared transactions will not be available in C7 SCS.

The Eurex Repo market will be part of the next stage of the C7 SCS migration, which is planned to come into effect in 2022. Therefore, currently existing netting and settlement processes for this market are still in place, remain in the existing CCP system and will not be amended with the introduction of C7 SCS Release 1.0.

The timeline for the new platform C7 SCS, Release 1.0, is as follows:

Start of simulation: February 2021
Start of production: 28 June 2021

2. Required action

As the new release introduces changes across the full clearing and settlement process chain in terms of new netting model, creation of delivery positions, availability of settlement instructions at the (I)CSD, delivery management and reporting, clients have to ensure that those areas are analysed by the appropriate teams on the clients’ side.

In case of cooperation with back-office vendors, Clearing Members should contact their third-party providers as soon as possible to ensure that the necessary adjustments for the introduction of C7 SCS Release 1.0 can be made.

Please check whether you have registered and/or updated your Release Contacts for C7 SCS via the Member Section on the Eurex Clearing website www.eurexclearing.com, under "Release Contacts".

In parallel, please subscribe to Eurex Clearing circulars and newsflashes on our new subscription website under the following link:

Resources > Circular & Newsletter Subscription

Please note that any communication regarding C7 SCS will only be distributed via Eurex Clearing circulars and newsflashes.

3. Details

A.  Timeline

A detailed Communication Calendar is attached to this circular and is also made available on the Eurex Clearing website under the following link:

Technology > Eurex Clearing's C7 SCS > System documentation

B.  Overview of functional changes

The following list provides a functional overview of the features given to the participants with the new C7 SCS:

• Trade Date Netting (TDN) is a new mechanism offered with C7 SCS, substituting today’s Basic Service, Extended Service and Full Service with Actual Settlement Day Netting (ASDN).
• Participants have the following choice for the Processing Method setting: Netting (default), Aggregation or Gross Processing. The selection must be performed per: Clearing Member, Settlement account, Trading Member, Trading location and Account Type.
• Delivery instructions can be sent out as released (default) or on hold on the same level of netting parameters.
• At the end of the trading day, Netting, Aggregation or Gross Processing is performed combining single trades to Net Position Trades depending on the Processing Method.
• For every Net Position Trade, a delivery instruction is sent to the respective settlement location (CBF/T2S, CBL and SIX SIS) already on the trading day.
• A Net Clearing Report is provided on the end of each trading day containing single trades, resulting Net Position Trades and delivery instructions.
• Instead of today’s Gross Delivery Management on single trades, Members can modify the Hold/Release status on delivery instructions at the (I)CSD. T2S members can use partial release at CBF/T2S.
• Eurex Clearing offers a routing service for change of Hold/Release status and partial release of pending delivery instructions. Participants can send requests via the SWIFT interface to C7 SCS. Eurex Clearing will forward these requests to the respective settlement locations.
• Members will receive the Corporate Action (CA) Information directly from (I)CSDs and can rely on them for further processing.
• Eurex Clearing will reflect updates to delivery instructions received from the (I)CSD due to Hold/Release status changes, impacts due to Corporate Actions and outstanding parts of deliveries resulting from partial settlement in the Pending Delivery Report.

C.  Reports

• All C7 SCS Reports will be provided in XML format to the Common Reporting Engine (CRE). Moreover, participants can opt for reports in text version. 
• Changes to reports selection for Trading Participants (for both XML and text versions) have to be instructed by their respective Clearing Members via a dedicated form.
• All C7 SCS reports (especially Pending Delivery and Settled Delivery reports) will be provided by the end of each business day for net position trades.

D.  Technical connection

The delivery management functionality can either be performed via Routing Service offered by C7 SCS or directly at the (I)CSD. Routing Service can be used via SWIFT, as no specific Member GUI for C7 SCS will be provided to our Members. 

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

Attachment:

• C7 SCS Member Communication Calendar 

Further information