NextGen ETD Contracts: Amendments to rollout approach

1.  Introduction   

Based on feedback from market participants, Eurex Frankfurt AG and Eurex Clearing AG (Eurex) have decided to amend the rollout of the Eurex NextGen ETD Contracts Initiative to extend testing times for market participants and to streamline the introduction approach by reducing complexity and migration risks. 

More information about the Next Generation ETD Contracts initiative is provided on the Eurex Clearing website www.eurex.com/ec-en/ under the following links:

Support > Initiatives & Releases > Projects > Next Generation ETD Contracts

Support > Initiatives & Releases > C7 Release 8.1

There, you will also find system documentation, circulars, timeline and much more information.

2.  Details of the amended rollout approach

The amended rollout is based on the following steps:

2.1 Technical T7, C7, and Prisma Releases on 27 June 2022

To introduce the technical changes required to handle sub-monthly expiring contracts (i.e., daily and weekly expiries), the technical release dates for T7 Release 10.1, C7 Release 8.1 and Prisma Release 11.1 on 27 June 2022 will stay unchanged as already communicated in previous circulars.

Important: Independent of the technical changes introduced with the releases, the usage of the YYYYMM logic stays in place for all market participants between 27 June 2022 until the functional go-live on 6 February 2023 when the usage of the YYYYMMDD logic becomes mandatory (see below). Details regarding the required changes including an overview on mandatory and backwards-compatible scope items for the software releases can be found in Attachment 1.

2.2 Functional go-live of YYYYMMDD logic on 6 February 2023 and subsequent launch of NextGen business initiatives

To facilitate overall industry readiness, Eurex will perform a functional go-live approach that includes the following steps:

• As of 6 February 2023, all market participants are required to be able to handle sub-monthly expiring contracts. The usage of the YYYYMMDD logic becomes mandatory for all Exchange Traded Derivatives (ETD) contracts available for trading at Eurex Deutschland (Eurex ETD Contracts)¹⁾.

¹⁾ The contract eligibility flag will be switched to the YYYYMMDD logic for all contracts available at that point in time.

Please be aware that all Eurex ETD Contracts that are created after 6 February 2023 will be set up as contracts that require the YYYYMMDD logic. As Eurex expects participants to be able to support the YYYYMMDD logic as of 6 February 2023, Eurex will automatically flag all participants as of the functional go-live date as compliant with the new identification logic based on YYYYMMDD²⁾.

²⁾ In case of questions or issues, participants should contact their Key Account Manager (KAM).

Launch of NextGen business initiatives:

• Integration of weekly expiring contacts starting as of 13 February 2023 (sequential listing approach – details see Attachment 2)
• Basis trading for MSCI Futures (Market-on-close) with daily expiring contracts in MSCI Futures on 20 February 2023
• Volatility strategies for Single Equity Options with daily expiring contracts in physically settled Single Stock Futures on 27 February 2023

Further intra-weekly expiring contracts will only be introduced after the integration of weekly expiring Friday options contracts is completed – separate communication will follow. For more details (i.e. Monday and Wednesday Weekly Options contracts) please refer to Eurex Circular 034/22 (Announcement of T7 Release 11.0).

Given the additional time provided until functional go-live, all market participants are requested to ensure readiness of processes with and interfaces to their connected clients.

Timelines and scope items for topics and releases not part of the NextGen initiative are not affected by the amended NextGen rollout approach.

This includes the T7, C7 and Prisma Releases 11.0 for November 2022 (see for example Eurex Circular 034/22 for T7).

2.3 Removal of grace period 

Based on feedback from market participants and corresponding to the shift of the functional go-live to 6 February 2023, the originally foreseen grace period will be removed. Instead, a fixed date (6 February 2023) for the functional go-live will be introduced for all market participants to switch to the YYYYMMDD based NextGen logic.

With all market participants switching at the same time, the complexities between different market participants and vendors are eliminated. Simultaneously, risks are minimized as potential issues with give-ups/take-ups and position transfers are mitigated and no additional implementation is required to handle processes between market participants at different levels of readiness.

As the grace period will be removed, the need of disabling the flex to standard functionality will not be required anymore. Consequently, after the launch of the business initiatives, the usual flexible-to-standard contract conversion will be performed by Eurex.

3.    Required action 

Based on § 10 (3) of the General Terms and Conditions to the Agreement on Technical Connection to the Clearing EDP of Eurex Clearing AG (GTCs to the ECAG Connection Agreement) and § 2 (5) of the General Terms and Conditions to the Agreement on the Technical Connection and the Utilization of the Exchange-EDP of Eurex Deutschland (GTCs to the EFAG Connection Agreement), respectively, Eurex Frankfurt AG and Eurex Clearing AG herewith specify for counterparties covered by these agreements the participation in the respective simulation and testing phase of T7 Release 10.1, C7 Release 8.1 and Prisma Release 11.1 as mandatory. Publication of simulation activity plans for the November releases will follow later in this year. 

Therefore, all affected counterparties shall test the functioning of their systems and interfaces with the NextGen changes implemented by these IT releases (i.e., in particular, the YYYYMMDD logic) before 6 February 2023, and with any further changes implemented by these IT releases before the technical release date on 27 June 2022. 

Further, if the affected counterparties encounter any errors or malfunctions with respect to the interaction of their own systems and Eurex’s systems, they shall inform Eurex accordingly. 

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:

1. Presentation on required changes for T7 Release 10.1, C7 Release 8.1 and Prisma Release 11.1
2. Presentation on integration of weekly expiring contracts – sequential listing approach 

Further information