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CentrallyClearedDerivatives
Highlights

Event-driven risk Management – Aneweventdrivenrisk
managementcapabilityenablesEurexClearingmembers
Eurex Clearingisoneoftheworld’sleadingclearinghouses
toreceivetheinformationtheyneedonamorefrequent
andoffersfullyautomatedandstraight-throughposttrade
basis in order to monitor their Non-Clearing Members’
servicesforderivatives,equities,repo,energyandfixed
tradingactivity.Coreriskdatais‘pushed’toclientsevery
incometransactions.Asacentralcounterparty,ourfocusis
ten minutes. Thus, Eurex Clearing promotes proactive
toincreasemarketintegrity.EurexClearingactsasabuyer
intradaymanagementoffundingrequirements,allowing
toallsellersandasasellertoallbuyerstherebyminimising
formorecost-effectivecollateralmanagement.
counterpartyriskandmaximisingoperationalefficiency.
Ourofferingcomprisesflexibletrademanagement

Stop button facility for trading members –Tradingmembers
functions,advancedriskmanagementservices,efficient
areabletotriggera‘stop’actiononspecifictraders,which
collateralanddeliverymanagementtools.
cutsspecifictraderIDsofffromthemarketplace.Triggering
Withourhigh-quality,cost-efficientandcomprehensive
a ‘stop’ action makes it impossible for the trader ID to
valuechainofclearingservicesdeliveredviaastate-of-the-
engageinanyfurthertradingactivities.
artclearingsystem,ourcustomersarecleartotrade.

Cash routing management engine – A cash module has
been introduced, which centralises Eurex Clearing’s cash
EurexClearingisawhollyownedsubsidiaryofEurex
flowsinordertohandlethemmoreefficiently.Theengine
FrankfurtAGandisjointlyoperatedbyDeutscheBörseAG
supportstheuseofrealtimegrosssettlementaccountsin
andSIXSwissExchange.EurexClearingactsasthecentral
the TARGET 2 environment, allowing the use of non-
counterpartyforEurex,EurexBonds,EurexRepo,European
Germancentralbankaccounts.
EnergyExchange(EEX)theFWB
®
Frankfurter
Wertpapierbörse(theFrankfurtStockExchange)–both

Handling of multiple currencies per margin class – The
Xetra
®
andfloor–andtheIrishStockExchange.
current Release also facilitates the handling of multiple
currenciespermarginclass,whichincreasestheflexibility
EurexClearingservesmorethan114clearingmembers
andoperationalefficienciesforthehandlingofcashflows
locatedin10Europeancountriesandmanagesacollateral
indifferentcurrencies.
poolofapproximately€45billion.In2008,EurexClearing

Collateral management engine – Theintroductionofthe processedmorethan2.3billiontransactions,rankingitthe
collateral management engine means that the entry of largestCCPinEurope.
collateral requests will now be electronic. The intraday www.eurexclearing.com
substitutionofcollateralfacilityalsoallowsformoreprocess
efficientandcosteffectiveuseofvaluablecollateral.
With the introduction of Release 12.0 in November 2009,
EurexClearingisintroducingfurtherenhancements,especially
intheareaofreal-timeriskmanagement.
Footnotes:
1.EurexClearingstandsinbetweenthetwocounterpartieswithdifferentcredit
ratingsallowinginstitutionalinvestorstoobtainthemostcompetitiveprice.
Conclusion
2.SeeR.BlissandC.Papathanassiou(2006).
Thetrendforcentrallyclearedderivativescanonlycontinue
3.InThe Global Derivatives Market: An IntroductionthecostsoftradingETDcompared
–ithasmajorbenefitsforinstitutionalinvestorsintermsof toOTCwerecalculatedbylookingatthetotaltransactioncoststhatuserspay.
obtainingmorecompetitivepricing,positionoffset,improved 4.ClientAislongtenfuturesandClientBisshort5futures,theclearingmember
collateralmanagement,aneaseandabilitytoenterandexit
will pay initial margin to the exchange of its net position that is long five
whereastheclearingmemberwillrequireClientAtopayinitialmarginonten
positionsand probably mostimportant, counterparty risk is
(long)contractsandClientBonfive(short)contractstothem–netting.Netting
mitigated through the clearinghouse acting as central atEurexClearingisonaclearingmemberlevelacrossopenpositions.Thereis
counterparty.AsRogerEhrenberg
9
inTransparency on Trial: The
no netting across agent and proprietary positions and no netting across
differentNCMsunderthesameclearingmember.
Shift Towards Exchange-Traded Derivatives said,“Overtime,the
5.MarkoKolanovic,Ph.D.,isGlobalHeadofDerivativesandDeltaOneStrategy
inefficiencyoftheOTCmarketwillcauseittotakeabackseat
atJPMorgan.HiscolleagueAmynBharwaniisQuantitativeAnalyst.
totheexchanges,andthisisatrendthatwillbuildmomentum
6.Ratioofthesumofmarginstoafternettingloss.
overtime.ThinkaboutToyotaversusGM.Whowouldhave
7.See the Eurex Clearing website: www.eurexclearing.com for the complete
imaginedToyota’ssuccessthreedecadesago?Andnowthey
outlineofEurex’sOTCTradeFacilities.
arepullingaway.ThisishowIthinkoftheexchangemodel
8.FlexibleOptionstradesrequireaminimumsizeequaltotheminimumblock
versustheOTCmodel.Thechangingoftheguardisinevitable.
tradesizeintheregulartradedcontract.
Justwaitandsee.”

9.RogerEhrenbergiscurrentlyManagingPartnerofIACapitalPartners,LLC.
Earlier,heheldmanagingpositionsatDeutscheBankandCitibank.
worldPower2009 43
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