Amendments to the legal framework of Eurex Clearing AG

1.   Introduction

This circular contains information with respect to the service offering of Eurex Clearing AG (Eurex Clearing) and introduces amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions), to the General Terms and Conditions to the Agreement on Technical Connection to the Clearing EDP of Eurex Clearing AG (GTC to the Connection Agreement) and to the Price List to the Connection Agreement regarding the following topics:

A.  Implementation of Compensation Claim regarding GC Pooling Transactions qualifying as Same Day Repo Transactions

B.  Clarification on the Buy-In Process for Repo Transactions

C.  Editorial changes to the GTC to the Connection Agreement and to the Price List to the Connection Agreement

The amendments will become effective as of 1 September 2023. 

2.   Required action

There is no required action.

3.   Details of the initiative

A. Implementation of Compensation Claim regarding GC Pooling Transactions qualifying as Same Day Repo Transactions 

The Front Leg of GC Pooling Repo Transactions that qualify as Same Day Repo Transactions do not go through the netting process of Eurex Clearing. Same Day GC Pooling Repo Transactions are sent out to CmaX (Collateral Management System of CBL) immediately after trade execution and have to be fulfilled by Clearing Members on a gross basis. Exposure Adjustment Requests that are sent out to CmaX are processed in a sequential manner, meaning that the relevant Exposure Adjustment Request will only be settled by CmaX, if any preceding Exposure Adjustment Request has been fully settled.  

In case a Clearing Member partially or fully fails to fulfil its delivery obligation under the relevant GC Pooling Transaction qualifying as Same Day Repo Transaction on the relevant Contractual Settlement Date and provided that Eurex Clearing suffers a loss caused by such failure, Eurex Clearing shall be entitled to claim for compensation from the relevant Clearing Member. 

In this context, the following provisions of the Clearing Conditions will be amended, as outlined in Attachment 1: 

• Chapter IV Part 2 Number 2.6.4 

B. Clarification on the Buy-In Process for Repo Transactions

With the foreseen changes of the Clearing Conditions, the buy-in process applicable for failed Repo Transactions should be adapted to the buy-in process applicable for failed FWB Transactions.

If a Buy-In cannot be performed successfully or is performed only partially, Eurex Clearing is entitled to perform a Cash Settlement on the "Determination Date“, which is a Business Day between the 30th and 36th Business Day after the Contractual Settlement Day of the Term Leg of the Cash Provider.

Furthermore, the determination of the cash settlement amount is specified and shall be the higher of (i) the settlement price of the respective class of securities on the Business Day preceding the Determination Date as determined by Eurex Clearing, (ii) the agreed price per security under the failed Repo Transaction and (iii) the agreed price per security under the relevant Allocated Repo Transaction.

In this context, the following provisions of the Clearing Conditions will be amended, as outlined in Attachment 2:

• Chapter IV Part 2 Number 2.7.1 
• Chapter IV Part 2 Number 2.7.2 

C. Editorial changes to the GTC to the Connection Agreement and to the Price List to the Connection Agreement

In order to reflect the discontinuation of offering for Eurex Clearing GUI @X-tract and name changes with respect to two other Eurex Clearing GUIs, the following provisions will be amended, as outlined in Attachments 3 and 4:

• §§ 4, 5 and 16 of the of the GTC to the Connection Agreement, as outlined in Attachment 3
• § 2 of the Price List to the Connection Agreement, as outlined in Attachment 4

Publication of amendments of the legal framework of Eurex Clearing

As of the effective date, the full versions of the amended legal framework of Eurex Clearing will be available for download on the Eurex Clearing website www.eurex.com/ec-en/ under the following link: 

Rules & Regs > Eurex Clearing Rules & Regulations

The 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 prior to the relevant effective date(s) as stipulated in this circular. In case of an objection by the respective contractual party pursuant the preceding sentence, Eurex Clearing AG is entitled to terminate the respective contract (including a Clearing Agreement, if applicable). Instead of submitting an objection, the respective contractual party may submit in writing to Eurex Clearing AG comments to any amendments of the legal framework of Eurex Clearing AG within the first 10 Business Days after the publication of the amendments. Eurex Clearing AG shall assess whether these comments prevent the published amendments from becoming effective taking into account the interests of Eurex Clearing AG and all contractual parties. 

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.
 

Attachments: 

Updated sections of the following rules and regulations:

• 1 – Amended sections of Chapter IV Part 2 Number 2.6.4 of the Clearing Conditions of Eurex Clearing AG
• 2 – Amended sections of Chapter IV Part 2 Numbers 2.7.1 and 2.7.2 of the Clearing Conditions of Eurex Clearing AG
• 3 – Amended sections of Chapters 4, 5 and 16 of the GTC to the Connection Agreement
• 4 – Amended sections of § 2 of the Price List to the Connection Agreement

Further information