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Q&As

Brexit questions & answers

Please find in this section some Q&As on the Brexit topic as well as on other topics that might be useful in the evaluation of your Brexit transition plans

Overview of content
•    General information
•    Clearing relocation policy
•    Regulatory requirements
•    Trading locations
•    Re-papering of contracts and New membership documents
•    Risk and Default Management process

If you have further questions, please get in touch with the Transition Team by writing an e-mail to brexit-support@deutsche-boerse.com.

Trading locations

Would it be possible for an entity having a clearing membership to clear executed house business using another Clearing Member?

A Clearing Member can act as a Trading Member/Non Clearing Member (NCM) and clear business through up to 2 additional Clearing Members (See Clearing Conditions Chapter II, Point 1.9.3).

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

Can a Trading Member/Non Clearing Member (NCM) give up all of its clearing business to another clearing membership? Can the process be set as automatic?

New trades can be given up at execution by using a Give up account (G2) account on order entry and naming the clearing take up member. G2 is linked to specific position account (A account).

The process can be automated as STP via the FIS Clearvision application on the C7 clearing layer or via the C7 GUI.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

Must a registered Exchange Trader be employed by the same legal entity that holds the Trading Member/Non Clearing Member (NCM)?

The rules of employment are not as crucial as the professional and practical qualifications of each trader. EEA and Non EEA based traders must have passed and hold a valid Eurex Exam and pass the Eurex System training (certain exemption may apply).

The trader does not have to be employed by the same legal entity but can be employed by a separate legal entity. These Exchange Traders may, however, only trade on behalf of one Exchange Participant and not for another of the Exchange Participant for the same market.

There are explicit declarations concerning reliability that each trader must complete during the exchange trader registration process – ensuring that only ‘Qualified’ Eurex traders get access to the Eurex system.

All trader applications must be approved by the member's ‘Admission Administrator’ in the member portal – full access to the list of approved traders is available so legal and compliance teams of each member can be granted full visibility on all approved and applying Eurex Traders.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Repo

 

Re-papering of contracts and New membership documents

Is it possible to downgrade a Clearing Membership (GCM or DCM) to a Trading Membership (NCM) or a Trading Member/Non Clearing Member (NCM) to Registered Client (RC)?

It is possible. Please note that by doing so the current member ID will change.

Details of the forms to be  completed should be discussed with the respective Key Account Manager, or our Brexit Transition Team Brexit Transition Team.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

Is it possible to upgrade a Clearing Membership (GCM or DCM) to a Trading Membership (NCM) or a Trading Member/Non Clearing Member (NCM) to Registered Client (RC)?

It is possible. Please note that by doing so the current member ID will change.

Details of the forms to be completed should be discussed with the respective Key Account Manager, or our Brexit Transition Teamr Brexit Transition Team.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

 

Risk and Default Management process

Does Eurex allow offsets and cross-margining benefits across different clearing member legal entities of the same Corporate Group?

There is no offset or cross-margining benefit between different clearing member legal entities of the same Corporate Group as the default management may be triggered  by each legal entity independently and the final difference claim is calculated per legal entity.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

How will Eurex apportion collateral requirements with respect to a concentration risk threshold breach across different clearing member legal entities of the same corporate group? [See Rule 1.61 (1) (b) of Clearing Conditions Of Eurex Clearing AG]

Clearing Members are not allowed to deposit own issues (or issues of closely linked entities) as collateral.
Concentration limits are assessed both on Clearing Member group as well as on legal entitiy level and may apply to both the collateral pool and trading portfolios. In case a breach of a concentration risk threshold leads to increased margin requirements, the respective Supplementary Margin payment is allocated to the individual accounts of the respective Clearing Members. This also applies to multiple legal entity clearing memberships if a majority interest exists. In addition, the general wrong way risk handling as described on the webpage applies.

Entities: Eurex Clearing

Split entities post-Brexit can lead to potential loss of representation in the Risk Committee as the representation is depending on volumes per entity. How would the representation be insured for current participants?

The criteria defined in the Statutes of the EMIR Risk Committee is taken into consideration for the Clearing Member Ranking on which based Eurex Clearing invites its Clearing Members to be part of the Risk Committee are based on data considering all Clearing Members belonging to the same group:
(a) Margin Requirements and number of intra-day Margin Calls;
(b) products which may be cleared by a Clearing Member;
(c) number of Clients for which the Clearing Member provides the Clearing;
(d) number of Basic Clearing Members for which the Clearing Member acts as Clearing Agent; and
(e) diversification of the collateral provided (whereby a more diversified collateral portfolio results in a higher risk ranking)

Entities: Eurex Clearing

 

Time constraints

What is the standard timeframe for reviewing new membership applications and to what extent might this be challenged in the event of numerous applications being received simultaneously from multiple members? Any approval required from the board?

Upon completion of a fully verified application the standard timeframe allows for 5 working days.

The Transition Team has Board delegation to admit members who have met all the respective membership prerequisites.

Entities: Frankfurt Stock Exchange, Eurex Exchange, Eurex Clearing, Eurex Repo

 

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