As part of the Default Management Process, we establish so-called Default Management Committees (DMCs), which are staffed with employees of pre-selected Clearing Members which advise and assist us with regard to all Default Management Process-related matters.
We implement one DMC per Liquidation Group (LG) and each Committee consists of 2-4 DMC members. DMCs are continuously defined, so both Clearing Members and individual DMC members are aware of their assignment prior to any default situation.
Please note that Eurex Clearing might not implement a DMC for a particular LG, if the overall exposure in such LG does not require such measure from a risk perspective.
Scope of a Default Management Committee's mandate
Main task of each DMC is to help Eurex Clearing to define hedging strategies and to support the subsequent liquidation of respective positions. Ideally, DMC members are traders or former traders at the respective Clearing Member institution, who facilitate a successful Default Management Process by leveraging their professional expertise.
- DMCs are convened in case of a Clearing Member’s default and in case of Default Management Process simulations, which are intended to take place at least once per year. In case of an actual default situation, DMC members need to be present at Eurex Clearing’s premises (either in London or in Frankfurt) within two hours after being informed of the default situation. DMC members have to remain at Eurex Clearing’s offices until the Default Management Process has been finalized. For a Default Management Process simulation, DMC members are asked to make themselves available for a few hours on a previously communicated date. In case of extraordinary circumstances when physical attendance in the DMC meeting is not enforceable, Eurex Clearing may convene DMC meetings using remote access.
- Due to the confidential nature of information received during a DMC convention, it is prohibited for DMC members to share such information with their employer or any other third party. Legal basis for such confidentiality obligation is an agreement entered into between the nominating Clearing Member and Eurex Clearing, i.e. the Agreement for the Participation in a DMC. Individual DMC members do not have to enter into any contractual relationship with Eurex Clearing.
- As the ultimate decision regarding all Default Management Process-related matters remains with the Executive Board of Eurex Clearing, neither Clearing Members nor DMC members are liable for the economic success of their proposed hedging strategies or advice at any time.
Nomination of DMC members
- DMC members are assigned for an indefinite period of time until a termination of participation in the DMC is triggered by Eurex Clearing or the DMC member.
- All Clearing Members are invited to volunteer to participate in any DMC for the LGs they are active in.
- Only in case of an insufficient number of Clearing Members volunteering to participate in a particular DMC, Eurex Clearing would assign additional Clearing Members to serve such DMC. The assignment would be based on Clearing Members’ relative cleared volume (proprietary) in the three months prior to the DMC assignment phase.
- A Clearing Member does not have to participate in more than one DMC at a time. If a Clearing Member has been appointed by Eurex Clearing to participate in a particular DMC, and such Clearing Member evidences towards Eurex Clearing that it participates in a Default Management Committee or similar committee at another CCP for the same asset class during the same term, such Clearing Member is not obliged to participate in the DMC at Eurex Clearing.
- Once assigned to participate in a DMC, each relevant Clearing Member nominates one of its employees as DMC member and a second employee as DMC deputy. Amongst others, nominated DMC members have to be employed by the nominating Clearing Member or an affiliated company of such Clearing Member and be able to demonstrate relevant product knowledge and expertise with respect to DMC-related matters.
Market Advisors
- In addition to a DMC, Clearing Members may nominate one or more of their employees as so-called Market Advisors.
- Market Advisors shall advise Eurex Clearing on a continuous basis on recent market developments, market liquidity, potential hedging options and hedging costs. However, Market Advisors will not be provided with the actual positions to be liquidated.
- The nomination of Market Advisors takes place on a voluntary basis. Interested Clearing Members are invited to nominate employees by sending an e-mail to DMP_Inbox@eurexclearing.com, specifying the identity and contact information of the relevant individuals.
Volunteer for a Default Management Committee
Generally, any Clearing Member active in a particular Liquidation Group can volunteer to participate in the Default Management Committee (DMC) established for such group, by sending an e-mail to DMP_Inbox@eurexclearing.com. If the number of volunteers exceeds the number of DMC members needed, Clearing Members are assigned according to their cleared volumes (proprietary) in the last three months prior to the DMC assignment phase.
