Amendments to the Clearing Conditions of Eurex Clearing AG – Consultation

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) regarding the following topics:

A.  Preponement of disclosure in case of Failure to Deliver Rights

B.  Adjustment of thresholds for contractual penalties in respect to a Failure to Deliver Securities

C.  Clarifications on Failure to Deliver Securities and harmonization of wording and referencing

D.  Invoicing of Buy-in Fees and Cash Settlement Fees in currency EUR

The amendments under items A. and B. will become effective as of 20 November 2023. 

The amendments under items C. and D. are subject to a consultation process (Consultation). The Consultation will end with the expiry of 13 October 2023 (Consultation Period). The planned effective date for amendments under items C. and D. is 20 November 2023, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.

Production start: 20 November 2023

2.   Required action

Clearing Members, ISA Direct Clearing Members, Disclosed Direct Clients of Eurex Clearing AG, vendors and other affected contractual parties should take the amendments to the Clearing Conditions into consideration.

The amendments of the Clearing Conditions with respect to topics C. and D. are subject to a Consultation which will end with the expiry of 13 October 2023.

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation.

3.   Details

A.  Preponement of disclosure in case of Failure to Deliver Rights

As announced in Eurex Clearing Circular 025/23, Eurex Clearing will adjust the timing for disclosure of belated subscription rights transactions as part of C7 SCS Release 3.0. The disclosure will be brought forward to the business day before the last day of the subscription period in case there are at least three business days between the trading date and the last date of the subscription period. For more details, please refer to the Release Notes for C7 SCS Release 3.0 published under the following link on the Eurex Clearing website www.eurex.com/ec-en/:

Support > Initiatives & Releases > C7 SCS Releases > C7 SCS Release 3.0

The changed rule on timing of the disclosure in case of Failure to Deliver Rights will be incorporated in the Clearing Conditions.

To reflect the changed rule, the following provision will be amended as outlined in Attachment 1:

• Chapter V Part 2 Number 2.2.2 in the second part of the first sentence of the Clearing Conditions

B.  Adjustment of thresholds for contractual penalties in respect to a Failure to Deliver Securities

Eurex Clearing adjusts the minimum threshold in several foreign currencies for contractual penalties in respect to a Failure to Deliver Securities on dividend record dates so that the threshold matches an approximate equivalent of EUR 5,000 considering latest exchange rates.

To reflect this harmonization, the following provisions will be amended as outlined in Attachment 1:

• Chapter V Part 2 Number 2.2.1 (6) (b) Sub-paragraph 6 of the Clearing Conditions

C.  Clarifications on Failure to Deliver Securities and harmonization of wording and referencing

Eurex Clearing proposes several amendments to the Clearing Conditions to streamline its legal framework in respect to the measures prescribed in case of a Failure to Deliver Securities. The amendments will harmonize wording and structure across Chapters I, II, IV and V of the Clearing Conditions and implement some clarifications on the applied procedure in relation to a Failure to Deliver Securities. Please note that the regime in respect to buy-in, cash settlement and disclosure and the related procedures has not been changed.

Furthermore, some paragraphs were removed as they became obsolete after introduction of the C7 Securities Clearing Service (C7 SCS) in September 2021.

To reflect these amendments, the following provisions of the Clearing Conditions will be amended as outlined in Attachments 1, 2, 3 and 4:

• Chapter V Part 1 Number 1.1.2 and Part 2 Numbers 2.1, 2.2, 2.3, 2.4 and 2.5 of the Clearing Conditions
• Chapter I Part 1 Number 1.4.4 of the Clearing Conditions
• Chapter II Part 1 Numbers 1.1 and 1.10, Part 2 Numbers 2.3, 2.5, 2.7, 2.16, 2.17 and 2.29 and Part 3 Numbers 3.5, 3.6, 3.9 and 3.11 of the Clearing Conditions and
• Chapter IV Part 2 Number 2.7 of the Clearing Conditions

D.  Invoicing of Buy-In Fees and Cash Settlement Fees in currency EUR

Eurex Clearing decided to harmonize the invoicing of Buy-In Fees and Cash Settlement Fees related to an FWB Transaction, Eurex Transaction or Repo Transaction, and to charge such fees always in currency EUR – independent of the settlement currency of the related securities transaction. When converting fees into the invoice currency, Eurex Clearing will use a commercially reasonable exchange rate applicable at the relevant point in time.

For avoidance of doubt: Costs for Buy-Ins resulting from offsetting price differences and cash settlement amounts continue to be charged in the settlement currency of the respective securities transaction.

To reflect this harmonization, the following provisions will be amended as outlined in Attachments 1, 2 and 3:

• Chapter V Part 2 Numbers 2.2.1 (2) (b) and (3) (d) of the Clearing Conditions
• Chapter I Part 1 Number 1.4.4.1 of the Clearing Conditions
• Chapter II Part 2 Number 2.17.4 and Part 3 Numbers 3.6.7 and 3.11.5 of the Clearing Conditions

Consultation with respect to the amendments to the Clearing Conditions (topics C. and D.)

Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, proposed amendments to the Clearing Conditions are subject to a Consultation which will end with the expiry of 13 October 2023.

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.

During the Consultation Period, comments on proposed changes or amendments shall only be submitted through a web-based commenting service for which a registration form is available on the Eurex Clearing website under the following link:

Find > Forms: Consultation Form

The form has to be duly signed and returned to Eurex Clearing via e-mail to SpecialProvisions@eurex.com in order to obtain a User ID and Password together with a link for accessing the web-based commenting service.

To the extent that Eurex Clearing decides to implement any comments received during the Consultation, the so-amended version of the Clearing Conditions will be published after the Consultation.

The currently envisaged effective date of the changes to the Clearing Conditions is 20 November 2023. However, after the Consultation Period, Eurex Clearing will issue a separate circular to announce the concrete date on which the proposed changes (as the case may be, implementing comments received during the Consultation) will come into effect. 

This announcement will be made with at least 15 Business Days’ notice (Regular Notification Period). However, if Eurex Clearing should receive a request for a Prolonged Notification Period from more than two Affected Customers during the Consultation Period, a Prolonged Notification Period as set out in the Clearing Conditions will be applied and Eurex Clearing will notify all affected parties accordingly.

Publication of amendments to the Clearing Conditions

As of the effective date, the full version of the amended Clearing Conditions will be available for download on the Eurex Clearing website under the following link: 

Rules and Regulations > Eurex Clearing Rules and Regulations > 1. Clearing Conditions

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:

• 1 – Amendments to Chapter V of the Clearing Conditions
• 2 – Amendments to Chapter I of the Clearing Conditions
• 3 – Amendments to Chapter II of the Clearing Conditions
• 4 – Amendments to Chapter IV of the Clearing Conditions

Further information