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No.

Eurex Clearing has access to the intraday credit facility of the Deutsche Bundesbank.

Yes. Eurex Clearing has adequate credit facilities with a number of investment grade rated banks in place which, together with other liquidity sources, cover Eurex Clearing's intraday and overnight financing needs.

On 10 April 2014, Eurex Clearing received a permission from the German Federal Financial Supervisory Authority to perform clearing services pursuant to Article 17 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (European Market Infrastructure Regulation, EMIR). The authorisation as EMIR-compliant CCP also determines Eurex Clearing as a qualifying CCP under Capital Requirements Regulation (CRR). 

Eurex Clearing is also a credit institution under the German Banking Act and fulfils the requirements under the European legislation, in particular Capital Requirements Regulation (CRR) / Capital Requirements Directive (CRD IV). 

Eurex Clearing is registered with the Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organisation (DCO) for clearing OTC interest rate swaps for US Clearing Members in accordance with the Commodity Exchange Act.

Eurex Clearing AG has been recognized by the Swiss Financial Market Supervisory Authority FINMA as a foreign central counterparty  and is considered by the Swiss National Bank as a systemically important financial market infrastructure for the stability of the Swiss financial system.

As a consequence, the list of the relevant authorities can be found below:

BaFin
Marie-Curie-Str. 24-28
60439 Frankfurt

Deutsche Bundesbank
(Central Administrations Center Frankfurt / Main)
Taunusanlage 5
60313 Frankfurt am Main

Deutsche Bundesbank
(Head Office) Wilhelm-Eppstein-Str. 14
60431 Frankfurt am Main

Swiss National Bank (SNB)
Börsenstr. 15
CH-8022 Zürich

Swiss Financial Market Supervisory Authority FINMA
Laupenstr. 27
CH-3003 Bern

Financial Conduct Authority (FCA)
25 The North Colonade, Canary Wharf
London E14 5HS

Yes, Eurex Clearing provides reporting to regulators due to different regulatory prescriptions and in different time periods.

Eurex Clearing reports to the following public authorities

• the Federal Financial Supervisory Authority (BaFin),
• the German Central Bank (Deutsche Bundesbank),
• the Swiss Financial Markets Authority (FINMA),
• Commodity Futures Trading Commission (CFTC),
• the Swiss National Bank (SNB).

For further information, please contact our regulatory section.

Eurex Clearing AG is audited by an external auditor. The auditor is PricewaterhouseCoopers (PwC) and the audit takes place on a yearly basis.

Eurex Clearing AG rules are stipulated in the Clearing Conditions which are part of the general terms and conditions. Eurex Clearing AG reserves the right to amend the Clearing Conditions at any time; those amendments and additions shall be announced via electronic circular to the Clearing Members, Basic Clearing Members and/or other customers ("Affected Customers") at least fifteen (15) business days (Regular Notification Period) prior their effective date fixed in the relevant notice.

If Special Provisions are to be changed or amended, Eurex Clearing AG will carry out a Consultation and invite all Affected Customers to submit comments to the proposed changes and amendments and/or to express their desire for the application of a Prolonged Notification Period within one month after the publication of the relevant invitation. In case three or more Affected Customers request the application of a prolonged notification period, the notification period will be extended to three (3) months (“Prolonged Notification Period”).

Each Affected Customer accepts each amendment and addition to the Clearing Conditions, unless it objects by written notice to Eurex Clearing AG within the Regular Notification Period or the Prolonged Notification Period, Unless otherwise provided in the Clearing Conditions, all information to be published according to these Clearing Conditions shall be displayed for at least three business days, available here.

Every employee and external service provider of Deutsche Börse Group is obliged to adhere to the “Guideline for Keeping Professional and Banking Secrecy”. Professional Secrecy is the obligation for any employee to treat information obtained pursuant to professional activities confidential. Banking Secrecy is derived from this by adding specific provisions while limiting its application to employees of regulated entities. All information received within the conduct of professional activities must therefore be treated in the strictest confidence by employees and external service providers and must not be disclosed to any unauthorized party.

The adherence of client confidentiality is ensured by the implementation of diverse control systems like the Internal Control System (ICS), Group Compliance and Internal Auditing.

For further information please see also our annual report.

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Membership comes in two categories at Eurex Clearing - General Clearing Membership and Direct Clearing Membership.

• ­A General Clearing Member (GCM) may clear its own transactions, those of its customers, as well as those of trading participants that do not hold a clearing license (known as Non-Clearing Member - NCM).

• ­A Direct Clearing Member (DCM) is entitled to clear only its own transactions, those of its customers, and those of its corporate affiliated NCMs. Only a Clearing Member - GCM or DCM - may be a counterparty of Eurex Clearing in a transaction.

As a result, legal relationships are essentially concluded between Eurex Clearing and a given Clearing Member, and in turn between that Clearing Member and the respective NCM.

Applicants must be authorized and entitled by their respective regulatory authorities to operate in the custody and loan business as well as to accept receipt of margins in the form of cash and/or securities. In addition, Clearing Members must show evidence of a certain minimum level of own funds and must pay a contribution to Eurex Clearing’s Clearing Fund. Both the level of contribution to the Clearing Fund and the level of own funds depend on the status of the Clearing Member (GCM or DCM).

Own fund requirements, in EUR mn

Contribution to Clearing Fund, in EUR mn

*Initial margin corresponds to the sum of futures spread margin and additional margin.

Additional admission requirements for all our Clearing Members include different accounts that they need to set up. Every member must hold accounts at a central securities depository for the deposit of collateral and execution of settlement related payments. Further, we require evidence of cash accounts for clearing related payments, e.g. premiums.

With our fee model, we encourage our members to conduct business at Eurex Clearing in multiple markets by taking advantage of economies of scale. For a first membership, applicants are charged a one-off admission fee as well as an annual membership fee. If a company wishes to become a Clearing Member for additional markets that we clear, no additional admission or membership fees are levied. In line with the markets that we serve, companies may apply for one or more of the following clearing licenses:

• ­ Eurex Exchanges
• ­ Eurex Repo
• ­ Frankfurt Stock Exchange­
• ­ EurexOTC Clear
•  Securities Lending

For further information, please also consult our webpage. Click here.

All forms necessary for the registration to the various Eurex Clearing service offerings can be found on our webpage under here.

We charge applicants a one-off admission fee of EUR 50,000 to become a Clearing Member, as well as an annual membership fee of EUR 25,000. We designed our fee model to encourage Members to take advantage of all the markets that we serve. For this reason, if you wish to become a Clearing Member for any of the other markets we clear we do not charge any additional admission or membership fees.

Additional fees with regard to different connection components and transaction volumes can be found on the Eurex Clearing Price List.

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• What model is used to calculate initial margin?

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• How is the default fund calculated for each member?

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• Are there any intra-day calculations and if so is this called for?

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• ­Are there any offsets against other products?

Eurex Clearing Prisma calculates combined risks across all markets cleared by Eurex Clearing. Cleared products that share similar risk characteristics are assigned to the same so-called Liquidation Group, which results in more comprehensive risk calculations enabling cross margining across positions within any Liquidation Group. Our margining method and default management process are closely aligned.

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Cash collateral:

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Securities collateral:

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Collateral deposit

The Clearing Member delivers the securities to the relevant account directly within the system of the chosen (I)CSD i.e. Clearstream Banking Frankfurt (CBF), Clearstream Banking Luxembourg (CBL) or SIX SIS. All deposits are reflected near-time within the collateral management system of Eurex Clearing® C7. If a deposited ISIN cannot be accepted (due to ineligibility of the security or breach of concentration limit), Eurex Clearing instructs a near-time transfer back to the member's redelivery account.

In case a tri-party collateral management system is used, the Clearing Member needs to instruct an increase of a Collateral Claim.

Collateral withdrawal

Securities withdrawal instructions are entered using the “Collateral Transaction Entry” window of the Eurex Clearing® C7 system. Once confirmed by Eurex Clearing Operations that the margin requirement is still covered without the securities requested, the securities are transferred from the respective collateral account into the member's redelivery account. If a withdrawal request leads to an under-collateralization in the member’s account, the transfer of the requested securities is optionally postponed until the next business day or intraday until the appropriate amount of funds is in the account to fully cover the margin requirements.

Collateral Claim decreases need to be instructed via the tri-party collateral management system of the respective depository. Once confirmed by Eurex Clearing Operations that the margin requirement is still covered with the reduced claim amount, the tri-party collateral management system will move securities with a value up to the free amount to the respective source account.

Information about collateral

The Clearing Member may manage collateral on several windows on the Eurex Clearing^® C7 GUI.

• Collateral Transaction Input / Collateral Transaction - Mass Input
  The Collateral Transaction Input window is used for collateral withdrawals and deposits by a member and by Clearing Operations on behalf of a member. Members may withdraw securities or deposit/withdraw cash through this window. The Collateral Transaction – Mass Input window allows a fast entry of cash deposits or withdrawals for multiple pools at the same time.
• Four Eyes Principal – Collateral
  The Four Eyes Principal window for the collateral management allows the approval or rejection of
  - transaction input/cancellation
  - Permanent Cash Balance amendments.
  The member can define on user level whether the four eyes principal feature is to be used.
• Collateral Transaction Overview
  The Collateral Transaction Overview window provides a variety of filter options to search for all or specific transactions that have been entered for a pool. Transactions generated out of the Mass Input can as well be found here. After settlement/cancellation any transaction can be historically enquired for approx. 60 days.
• Collateral Transaction Details
  The Collateral Transaction Details window provides detailed status information for a single collateral transaction including its entire history (status updates). After settlement/cancellation transaction details can be historically enquired for approx. 60 days.
• Collateral Position Details
  The Collateral Position Details window provides a variety of filter options to search for all or specific collateral positions (in cash, securities or claims) that are held in a pool.
• Collateral Pool Status Overview 
  The Collateral Pool Status Overview window provides an overview of the overall values of cash, securities or claims in a pool and its current excess/shortfall.
• Permanent Cash Balance (PCB) Maintenance
  The PCB Maintenance window allows the member to define a minimum cash balance per currency that shall remain as cash collateral and hence will not be swept out in the end of day processing.
• CSD Account Maintenance
  The CSD Account Maintenance window allows the member to inquire all accounts that are setup for a respective pool.

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At Eurex, position limits exist according to § 14.7 of the Exchange Rules of Eurex Deutschland. The size of the respective limits can be learned from the product specifications on the Eurex Exchange website.

Trading Surveillance Eurex Deutschland is monitoring the adherence of the position limits intraday and is informing the Börsenaufsichtsbehörde Hessen as well as the Executive Board of Eurex in case of breach of the Exchange Rules. They then decide on whether to forward the statement of affairs to the sanction committee of Eurex Deutschland. In succession, the sanction committee is able to impose sanctions up to an amount of EUR 250.000 and/or to impose a temporary or definite expulsion from trade.

Yes, Deutsche Börse Group has implemented a formal crisis management process with defined responsibilities. The process applies Group-wide for all activities and organizational or legal entities, including Eurex Clearing AG.

­The Crisis Management Team is composed of the Incident and Crisis Managers from the different divisions of Deutsche Börse Group. It is their role to ensure a coordinated incident response, including internal and external communication.

Yes, the BCM plans address the unavailability of systems, workspace, staff and suppliers. Supplier unavailability preparedness is regularly reviewed and generally addressed by service level agreements or multiple vendor arrangements.

All Systems but Xetra® and Xetra® International Market are set up with an automatic fail-over process which makes the take over immediate. Xetra® and Xetra® International Market are set up fault tolerant, but disaster recovery requires a restart of the system at the back up site, which typically should be done within an hour. However, the general recovery time objective of Deutsche Börse Group in case of a disaster is 2 hours.

In case of technical issues emergency information is provided via the following media:

• System Newsboard
  
• SMS Service
  
• E-mail
  

Information on technical issues is distributed immediately if impact on members of Eurex has been recognized.

The responsibilities of Eurex and Eurex Clearing in an outage scenario are described within Section 12 on “Technical Problems” of the Technical Implementation Regulations of Eurex Deutschland and Eurex Zürich Concerning Technical Equipment.

There are three types of transactions that are liable to French Financial Transaction Tax (FTT):

• Purchasing transactions in French equities or comparable securities (Equity FTT),
• High frequency-trading transactions in equities (HFT FTT), and
• Purchasing transactions in uncovered CDS in European Union sovereign debts (CDS FTT).

The tax rate is between 0.01 percent and 0.3 percent of the transaction amount and is depending on the type of transaction:

• The tax rate on purchasing transactions in French equity trades will be the equivalent to 0.3 percent of the value of the shares of listed French companies named by the French Ministère de l’Economie et des Finances.
• The tax on high-frequency trading will be the equivalent to 0.01 percent of the amount of cancelled or modified orders exceeding a threshold to be set by decree.
• The tax on naked trades in Credit Default Swaps (CDS) will be the equivalent to 0.01 percent of the notional value of CDS contracts of a European Union member state.

Finally, the person is liable to tax, who has initiated the transaction:

• The Equity FTT is payable by the buyers regardless of their nationality or place of residency and regardless of the trading venue;
• The FTT on high-frequency trading will be payable by French companies engaging in proprietary HFT;
• The tax on transaction in naked CDS is payable by French individuals or legal entities that acquire these contracts for reasons other than to hedge existing assets or commitments.

An accountable party is an institution which is legally obliged to provide the declarations and
to pay the financial transaction tax, and which is

• the investment service provider or broker that has executed the transactions on its own behalf or on behalf of its clients, or
• the securities account holder of the investor (when the transactions are not executed by brokers, e.g. OTC transactions).

In the view of French market participants the accountable party is the account holder of the final investor.

The tax rate is 0.3 percent of the transaction amount.

Affected are capital instruments ("titres de capital") and assimilated securities (mainly equities), listed on a French or foreign regulated market, issued by companies whose headquarter is located in France, and capitalisation exceeds one billion Euro on the 1st of January of the fiscal year.

Five conditions have to be met which are written in French Tax Code Article 235 ter ZD, I, 1:

“An acquisition for consideration of shares and other equity instruments (“assimilated equity securities”) admitted to trading on a regulated market issued by a French company with a market capitalisation of more than €1 billion resulting in a transfer of ownership.”

This means shares of any kind: ordinary shares, preferred stock, twin shares, profit-sharing certificates, preferred dividend shares, etc., traded not only in France, also in a European or foreign regulated market.

According to the law, equity securities and assimilated instruments (including securities issued under foreign law) are defined as:

• Equity securities, also instruments covering shares, and securities that give, or may give, access to equity or voting rights
• Investment certificates and voting rights certificates
• Certificates representing French equity shares (e.g. ADRs or GDRs, from 1 December 2012 on)
• Bonds representing French equities, for example bonds convertible into equity shares or bonds with redeemable share subscription warrants (OBSAR).

French Tax Authorities will publish yearly a list of the affected companies, which will be completed by French data providers with the ISINs. This list remains unchanged for the entire year, unless

• A new company will be listed, or
• A company’s headquarter will be moved abroad.

Only such purchasing transactions in French securities with the named ISINs are subject to tax and are subject to reporting. Purchasing transactions in French securities with other ISINs are neither subject to tax nor subject to reporting.

As we know, several data suppliers will provide identifiers that could be used as a basis for the selection of related transactions.

Transactions in equities are subject to tax, no matter where the transaction took place, whether the transaction has been executed by the accountable party for its own account or following a client order, no matter where the transaction settles.

Only purchases are liable to tax, sales will not be taxed. Purchasing transactions are mainly:

• The purchase on a market
  
• The exercise of a financial derivative, that results in the transfer of ownership of the underlying securities to one of the parties to the transaction
  
• The conversion of a bond representing equities
  
• Certain corporate actions (details have to be published yet).
  

The transaction is taxable if it is for value, regardless of the amount, so, gratuitous transactions (e.g. the transfer of securities without payment) should be out of scope (this was not announced finally).

Although OTC transactions are not processed on a regulated market, they are subject to tax when the purchased stock will be traded on a regulated market.

Transactions are taxable if and when they generate a transfer of ownership (“acquisition”), that means:

• The transfer of ownership takes place by crediting the shares in the purchaser’s securities account
  
• Tax is applicable based on settlement date
• Intraday transactions are subject to tax only for resulting net buying position at the end of the day
  

The transfer of an equity or assimilated instrument as collateral is not subject to tax.

In principal, equity purchasing transactions are subject to tax unless one or more of the nine exemptions to the financial transaction tax in equities named in the law are met:

1. Purchases linked to an issue of securities (primary market) — no matter if the new issue
   will be purchased directly or via an investment service provider
   
2. Purchases made by a clearing house or a CSD
   
3. Purchases linked to Market-Making activities
   
4. Purchases linked to liquidity contract
   
5. Intra-group transactions
   
6. Securities lending and repos
   
7. Acquisitions by employee mutual funds, employee open-ended investment funds or by employees directly
   
8. Acquisitions for employee saving schemes (including purchase of company shares)
   
9. Acquisitions of bonds exchangeable or bonds convertible in shares (the purchase of the bonds is tax-exempt, the conversion of the bonds into shares is taxable)
   

Foreign persons who carry out activities or transactions governed by foreign law may be exempted if they are similar to exempt transactions carried out by French persons or governed by French law.

To avoid double taxation, Market-Making activities are exempt from financial transaction tax in equities. Thus, the FTT shall not apply to activities of an investment company or a credit institution or an entity in a foreign country, or a local company that is a member of a trading platform, or a market in a foreign country when the company, institution or entity in question acts as intermediary and participates in transactions on financial instruments.

Two conditions have to be met:

• The company named above must act as an intermediary party on a financial instrument as defined in article L. 211-1 of the French Monetary and Financial Code.
  
• The “Market Maker” must
  • either by the simultaneous quoting of firm and competitive bid and ask prices of comparable size, resulting in the supply of liquidity to the market on a regular and continuous basis:
    • provide liquidity on a securities trading platform
      
    • supply liquidity to the market within the framework of OTC activities
      
  • or within the framework of his usual activity to the execution of orders made by clients or in response to their request for buy or sell orders,
    
  • or the hedging of positions relating to the carrying out of the abovementioned transactions.
    

The Article L. 211-1 of the French Monetary and Financial Code defines financial instruments as:

• Financial instruments include both financial securities and financial contracts.
  
• Financial securities include:
  • equity securities issued by joint-stock companies
    
  • debt securities, with the exception of bills of exchange and interest-bearing notes
    
  • units or shares in undertakings for collective investment.
    
• Financial contracts, also referred to as "financial futures", are futures contracts that appear on a list established by decree.
  

The tax shall not apply to transactions executed on behalf of issuers in order to promote the
liquidity of their shares within the framework of authorized market practices accepted by the
French Autorité des marchés financiers.

This requires the compliance with the rules of the French Financial Market Authorities based on the EU Directive 2003/6/EC of 28 January 2003 and Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC.

This exemption is similar to the exemption for market making transactions; the only difference is that the market participant is acting on behalf of the issuer and not on its own account.

All temporary transfers of ownership that are similar to the specifications in articles L. 211-22
and L. 211-27 of the Monetary and Financial Code should be exempt because they are
deemed to be a temporary transfer of ownership. So, the financial transaction tax shall not apply to securities financing transactions cited in No. 10 of Article 2 of the EU Commission Regulation (EC) No 1287/2006 of 10 August 2006, namely:

• Securities lending or borrowing (as defined in article L. 211-22 of the MFC)
  
• Sale and repurchase agreements (as defined in article L. 211-27 of the MFC)
  
• Securities purchase/resale or sale/purchase transaction
  

Legally responsible for providing the tax declaration, assessing and paying tax is the accountable party, which is

• The investment service provider or broker (regardless of its location) which has executed the transaction on behalf of its clients, or traded on its own behalf, or when offering underwriting or placement services.
  
• The securities account holder of the investor (regardless of its location), when the transaction is not executed by a broker.

Liable for the financial transaction tax where a chain of intermediaries is involved in a particular transaction, the first investment service provider who receives the purchase order from the purchaser is deemed to be the taxpayer.

The above named entities are responsible for ensuring that the tax is paid. In fact, the respective buyers are responsible to provide the account holder with the necessary information.

The tax is assessed:

• in case of a cash purchase, on the price paid for the security’s purchase
  
• in case of exercise of a financial derivative, on the exercise price set in the contract
  
• in case of conversion or exchange of a bond, on the price set in the issue price
  
• in other cases, including swaps based on the value expressed in the contract or, failing that, on the price traded on the most relevant market in terms of liquidity on the market’s closing day proceeding the day on which the trade took place
  

The crucial date for determining the net long position has not been finally defined. At many points it is spoken of the "transfer of ownership".

Outline of a possible process of evaluating the taxable amount (the evaluation proceeds on all transactions, regardless of transaction on own behalf or on behalf of others):

• First, all tax-exempt transactions (purchases and sales) have to be eliminated.
  
• In the next step, the sale transactions have to be subtracted from the sum of taxable transactions.
  
• After this, the average price of shares of all purchase transactions has to be calculated and multiplied with the numbers of shares (net position of taxable transactions).
  
• On this basis, the tax amount has to be calculated.
  

Mainly the investment provider that executed the purchasing order or, alternatively, the custody-account keeper for the buyer (in this case it is up to the buyer to provide the custody-account keeper with the relevant information) is responsible for the tax assessment.

Both taxable and non-taxable acquisitions must be declared. The accountable party must provide the exoneration reason for non-taxable acquisitions.

Clearstream Banking has created a reporting platform, where its customers could upload the tax reports. Clearstream Banking will forward these reports to Euroclear France.

Euroclear France is responsible for the following tasks:

• Collecting the tax declarations
  
• Collecting the tax from Euroclear France members
  
• Paying the tax to the French fiscal authorities
  
• Implementing some controls
  

Euroclear France has set up a domestic marketplace working group to define the operational
workflows and procedures.

Euroclear France is not involved in the following processes:

• Identification rules for taxable ISINs
  
• Market practice for intra-day and end-of-day netting positions
  
• Accounting and calculation of the tax for end investors
  
• Relationships between Accountable Parties and other players (settlement agents, custodians etc.)
  
• Financial transaction tax part of the law related to the credit default swaps and high frequency trading
  
• Direct declaration and payment to the French Treasury
  
• Detailed application for exoneration
  
• Corporate actions impact assessment
  

Transactions must be declared to Euroclear France until a date before the

fourth calendar day of the following month, the tax payment will also happen on the fourth
calendar day (or next business day) of the following month.

The tax has to be paid by the accountable party after reporting the taxable transactions. Hence, Eurex Clearing will not tax any transaction.

The French law defines high-frequency trading as "a transaction carried out by a company operated in France in equity securities executed on their own behalf through automated processing".

Only French companies are liable to tax. This means companies, customarily doing their business in France, within the framework of an independent establishment, or, via representatives with no independent professional personality, or resulting from operations that form a full business cycle.

All high-frequency trading transactions in equity securities are affected without any regional or capitalization restrictions. Only transactions for Market-Making activities are tax-exempt.

A computer algorithm determines whether to issue, modify or cancel orders and determines price and quantity parameters, and orders for a given security produced by the algorithm are issued, modified or cancelled according to a time period set by decree, which "may not exceed one second".

If the system is used in order to optimize the conditions for executing orders or transmitting orders to one or more trading platforms, or to confirm orders, then the system is not seen as a trading system for the purposes of the law.

In contrast to the financial transaction tax on equities, only a French market participant who is French tax resident and performs the high-frequency transactions is liable to tax.

The tax shall be declared and paid before the tenth of the month following the transmission of the orders described above, on a declaration whose model shall be established by the administration. The tax shall be paid when the declaration is filed. Market-Making activities are tax-exempt.

Three decrees on the tax on high-frequency trading are scheduled to be adopted after the law comes into force, defining:

• the general implementing measures of the provision on HFT transaction
  
• which delay an automated transaction is considered HFT
  
• the threshold beyond which cancellation or modification of orders will be charged
  

According to law, five conditions have to be met: "A swap on credit default of a Member State of the European Union that is purchased, uncovered, by a French resident".

With a credit default swap the holder acquires the right either to receive the sum corresponding to the difference between the par value of a reference bond asset and its market price (cash settlement), or to deliver this reference asset in return for payment of a price corresponding to its par value (physical delivery).

Only the purchases are tax liable when the position is not conducted to cover assets or commitments correlated to the value of the debt of the state covered by the credit default swaps.

The buyer of the credit default swaps must be established in France for tax purposes. This means, the French market participant who is French tax resident and purchases the uncovered credit default swaps is liable to tax.

The tax liability is paid by the taxpayer to the Treasury at the same time as VAT payment and is reported in the VAT return (monthly for companies subject to the normal VAT regime, quarterly for companies subject to the simplified regime).

This document is for informational purposes only. It is provided to Eurex Clearing’s clients informally, does not constitute legal or tax advice, is governed by our Terms and Conditions Of Use, and we are not acting as attorney. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained.

Legal advice regarding the French Financial Transaction Tax must be tailored to the specific circumstances of each case and the information provided to all Eurex Clearing clients may not be an appropriate fit in an individual case. Nothing contained here should be used as a substitute for the advice of competent legal or tax counsel.

Gruppe Deutsche Börse will not be liable or responsible to you for any breech of law, claim, loss, injury, liability, or damages related to use of this information.

In the event that individual parts of or formulations contained in this Disclaimer are not, or are no longer, legally valid (either in whole or in part), the content and validity of the remaining parts of it are not affected.

The information is based on the relevant French legislation, the draft letter to this application and different information of operational units (the “Blueprint for Financial Transaction Tax, Version 1” of Euroclear France) and French Financial Market Associations (“Financial Transaction Tax (FTT) – Preliminary assessment of the measures in the 2012 Supplementary Budget Act” of AMAFI).

Although the regulations refer to the transactions, from 1 August 2012 be made, are still unresolved questions of application. Despite of this, we have tried to summarize the key points based on the current state of play.

Section 871(m) IRC and the regulations thereunder impose a tax on DEAs paid or deemed paid pursuant to a derivative contract [such as a notional principal contract ("NPC") or other equity-linked instrument ("ELI")] that references (a) U.S. equity security(s).

Warrants, convertible bonds, certificates, structured notes, indexes, Repos, Securities Lending and listed derivatives fall within the scope of Section 871(m) IRC, if:

• the underlying securities are U.S. equities (regardless of the issuer's country of residence),
• these U.S. equities pay a dividend during the lifecycle of the derivative contract and
• the derivatives have a delta equal to 1 (from 1 January 2019 onwards delta greater or equal to 0.8) or meet the 'substantial equivalence test'.

• Equity Derivatives (Single Stock Futures and Equity Options)
• Futures and options on non-qualified indexes

Eurex Clearing AG received acceptance of its request for the status as Qualified Derivatives Dealer (QDD) by the U.S. Internal Revenue Service (IRS). This status was granted retroactively as of 1 January 2017.

Where Eurex Clearing AG is receiving or treated as receiving DEAs as Long Party, Eurex Clearing AG represents that it does not employ any combined transaction strategies despite potentially entering into multiple transactions over the same underlying security. Therefore, withholding agents should not subject any transactions in which Eurex Clearing AG is the Long Party to the combination rules under the presumptions of Treasury Regulations § 1.871-15(n).

It is the responsibility of each Clearing Member to adhere to its responsible party obligations to the extent applicable to them.

Eurex Clearing AG is not a responsible party within the meaning of Treasury Regulations § 1.871-15T(p) and hence is not required to provide its Clearing Members with any information regarding the identification of potential Section 871(m) IRC transactions, the applicable delta, dividend equivalent amount or the timing of withholding.

• Acting either as a primary withholding Qualified Intermediary (QI-A) or as QDD has become a legal prerequisite for the clearing of potential Section 871(m) IRC transactions.
• As outlined in the previous circulars 028/17 and 074/17, all Clearing Members are requested to monthly provide Eurex Clearing AG with all information required for the purposes of Form 1042/1042-S Reporting and Reporting Reconciliation.

• Long Party Clearing Members

Information is required from Long Party Clearing Members for the purposes of Form 1042/1042-S Reporting and Reporting Reconciliation.  

Long Party Clearing Members are obliged to determine whether a transaction is a Section 871(m) IRC transaction and the amount of any DEAs [see Treasury Regulations § 1.871-15(c)] that Eurex Clearing pays or is treated as paying to such Long Party Clearing Members.

• Short Party Clearing Members

Information is required from Short Party Clearing Members for the purposes of Reporting Reconciliation.
In order to reconcile the DEAs received by Short Party Clearing Members with the DEAs paid to Long Party Clearing Members, Short Party Clearing Members need to provide information

a) whether a transaction is a Section 871(m) IRC transaction and

b) the amount of any DEAs [see Treasury Regulations § 1.871-15(c)] that Eurex Clearing AG receives or is treated as receiving from such Short Party Clearing Members.  

Eurex Clearing AG is expecting its Clearing Members to provide all information required via the standard 871(m) IRC Template, which can be found under Rules & Regs > Regulations > U.S. Taxation. 

Please send all information to reporting871m@eurex.com

Long and Short Party Clearing Members must provide all information in form and substance on a monthly basis by the 10^th day of the following month at the latest (i.e. for August 2018 on 10 September 2018 ).

We kindly refer to our Clearing Conditions Chapter II Part 1 Provision 1.7. All amendments have become effective as of 3 April 2018.

Legal advice regarding Section 871(m) IRC must be tailored to the specific circumstances of each case and the information provided to all Eurex Clearing clients may not be an appropriate fit in an individual case. Nothing contained here should be used as a substitute for the advice of competent legal or tax counsel.