31.03.2016, 11:39
Deutsche-Boerse: Eurex Clearing to launch new access model
OREANDA-NEWS. Eurex Clearing, Europe’s leading clearinghouse and part of Deutsche Börse Group, today announced its plan to launch a new membership type that allows buy-side participants to have a direct contractual relationship with the clearinghouse facilitated by a clearing agent. The so-called ISA Direct service addresses changes in the regulatory landscape and will contribute to the safety, robustness and efficiency of the overall market. For buy-side firms, ISA Direct is a unique way to meet new regulatory requirements with reduced counterparty risk and strong protection for their assets. For clearing agents, the new service eases the adaptation to the new capital rules as it frees up equity capital currently required for client’s business while maintaining existing client relationships.
The new model will be available from summer 2016 onwards and will initially be offered for Eurex Clearing’s interest rate swaps and repo transactions of Eurex Repo’s “Select Finance” service. Listed derivatives and securities lending transactions are to follow. All regulatory approvals have been received.
“ISA Direct alleviates the regulatory requirement to centrally clear OTC derivatives in several ways. By enabling us to become a direct member of the CCP, our concerns regarding counterparty credit risks, clearing costs and portability of our assets are much better addressed compared to the traditional client clearing model,” said Daniel Berner, CIO Swiss Life Switzerland.
“The positive impact of Eurex Clearing’s new clearing models for OTC derivatives & repo is evident. GC Pooling positively influences our ability to fund business activities of our clients and tackles current liquidity constraints in the repo market. ISA Direct allows clearing members to continue their operational clearing relationship with clients without requiring the traditional per-formance guarantee. Therefore, we support a quick roll-out of both products by Eurex Clearing,” said Jason Vitale, Managing Director for Listed Derivatives & Markets Clearing, Deutsche Bank.
“This new innovative CCP membership type is a win-win for all involved parties. Besides higher capital efficiencies and the resulting lower costs as well as enhanced segregation and portability, ISA Direct will broaden the membership base of the clearinghouse, thereby lowering the concentration risk among existing clearing members; and subsequently strengthening the robustness and diversity of the CCP,” said Matthias Graulich, member of the Eurex Clearing executive board.
Notes to the editors:
Currently, the buy-side community is facing several challenges. The clearing obligation for standardized OTC derivatives in Europe will start in June this year in a phased approach. The number of trading counterparts and clearing brokers (sell-side banks) continues to shrink and the cost for services not only related to derivatives, but also securities financing transactions increases due to significant capital charges resulting from regulatory requirements such as leverage ratio, risk-weighted assets (RWA) charges or the net stable funding ratio (NSFR) requirements.
Eurex Clearing’s new membership type directly addresses these concerns. Key features of ISA Direct are:
• Direct membership of buy-side firms at the clearinghouse facilitated by a clearing agent
• The clearing agent acts as agent to cover the default fund contribution, default management obligations and optionally certain operations and financing functions
• ISA Direct member maintain legal and beneficial ownership of collateral.
Eurex Clearing is one of the leading central counterparties globally – assuring the safety and integrity of markets while providing innovation in risk management, clearing technology and client asset protection. Eurex Clearing provides fully-automated, straight-through post-trade services for derivatives, equities, bonds and secured funding & financing, as well as industry-leading risk management technologies.
Eurex Clearing serves more than 185 clearing members in 17 countries, managing a collateral pool of around EUR 57 billion and processing gross risks valued approx. EUR 17 trillion every month.
The new model will be available from summer 2016 onwards and will initially be offered for Eurex Clearing’s interest rate swaps and repo transactions of Eurex Repo’s “Select Finance” service. Listed derivatives and securities lending transactions are to follow. All regulatory approvals have been received.
“ISA Direct alleviates the regulatory requirement to centrally clear OTC derivatives in several ways. By enabling us to become a direct member of the CCP, our concerns regarding counterparty credit risks, clearing costs and portability of our assets are much better addressed compared to the traditional client clearing model,” said Daniel Berner, CIO Swiss Life Switzerland.
“The positive impact of Eurex Clearing’s new clearing models for OTC derivatives & repo is evident. GC Pooling positively influences our ability to fund business activities of our clients and tackles current liquidity constraints in the repo market. ISA Direct allows clearing members to continue their operational clearing relationship with clients without requiring the traditional per-formance guarantee. Therefore, we support a quick roll-out of both products by Eurex Clearing,” said Jason Vitale, Managing Director for Listed Derivatives & Markets Clearing, Deutsche Bank.
“This new innovative CCP membership type is a win-win for all involved parties. Besides higher capital efficiencies and the resulting lower costs as well as enhanced segregation and portability, ISA Direct will broaden the membership base of the clearinghouse, thereby lowering the concentration risk among existing clearing members; and subsequently strengthening the robustness and diversity of the CCP,” said Matthias Graulich, member of the Eurex Clearing executive board.
Notes to the editors:
Currently, the buy-side community is facing several challenges. The clearing obligation for standardized OTC derivatives in Europe will start in June this year in a phased approach. The number of trading counterparts and clearing brokers (sell-side banks) continues to shrink and the cost for services not only related to derivatives, but also securities financing transactions increases due to significant capital charges resulting from regulatory requirements such as leverage ratio, risk-weighted assets (RWA) charges or the net stable funding ratio (NSFR) requirements.
Eurex Clearing’s new membership type directly addresses these concerns. Key features of ISA Direct are:
• Direct membership of buy-side firms at the clearinghouse facilitated by a clearing agent
• The clearing agent acts as agent to cover the default fund contribution, default management obligations and optionally certain operations and financing functions
• ISA Direct member maintain legal and beneficial ownership of collateral.
Eurex Clearing is one of the leading central counterparties globally – assuring the safety and integrity of markets while providing innovation in risk management, clearing technology and client asset protection. Eurex Clearing provides fully-automated, straight-through post-trade services for derivatives, equities, bonds and secured funding & financing, as well as industry-leading risk management technologies.
Eurex Clearing serves more than 185 clearing members in 17 countries, managing a collateral pool of around EUR 57 billion and processing gross risks valued approx. EUR 17 trillion every month.
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