On 5 August 2013 the European Securities and Markets Authority (ESMA) finally provided clarity
that individual client segregation (see article 39(3) of the European Markets Infrastructure
Regulation (EMIR)) requires that the actual assets of the client are segregated and available for
porting. Both CCPs and Clearing Members are required under EMIR to offer individual client
segregation. ESMA further stated that models which merely segregate the value of collateral due
to the accounts of clients, ‘do not meet the requirement to offer individual client segregation’
resolving an area of uncertainty in the market.This confirms that Eurex Clearing’s Individual
Clearing Model is in line with the requirements of individual segregation according to EMIR.
Eurex Clearing’s Individual Segregation was launched in 2011 and offers EMIR compliant individual
client segregation through:
- individual client position accounts and segregation of the client’s actual assets
- ‘highly likely’ porting options
- compliant with industry standard client clearing documentation
- efficient collateral handling through asset tagging, or alternatively full physical segregation
at the CSD level - broadest range of eligible collateral globally
- flexible collateral management allowing collateral transformation and
- beneficial risk weighting under proposed capital rules.
The model also eliminates fellow customer risk, replacement risk and liquidation risk for buy-side
clients. The model will provide direct delivery features mitigating transit risk.