As part of European Market Infrastructure Regulation (EMIR), ICE Clear Europe provides client asset segregation and portability solutions for clients, so that should a clearing member default, a client’s positions and assets can be transferred to another clearing member.
ICE Clear Europe has developed a range of customer protection models to provide clients with a choice in the level of protection they would like to receive. Clearing members and clients can choose an account based on the client’s needs, including cost and asset class for example.
ICE Clear Europe offers the following client segregated accounts so that clearing members can provide their clients with a choice in the level of asset protection they opt for:
EMIR requires that central counterparties (CCPs) provide an individual client segregation model and CCPs can also offer further client segregation models and choices.
If a client opts for individual client segregation of assets, their positions and margin will be held in an account at the clearing house, along with any excess margin. With individual client segregation, a client’s positions, margins and excess margins are segregated and distinguished from margins of other clients and clearing members. Any excess margin held by an individually-segregated client, will not be exposed to another client or clearing member’s losses recorded in another account.
Under EMIR, CCPs are required to provide clearing members with accounts that ensure the following:
Clearing Members are then required to offer these client protection options to their clients.
In the event of a clearing member default, there are certain contractual commitments and procedures under Articles 48 (5) to (7) of EMIR that should be followed in respect of the management of client positions and assets held in each client account.
US Client Clearing ICE Clear Europe is also regulated by the CFTC and SEC and as a result has implemented a series of customer accounts for clients of FCM Clearing Members — Customer Omnibus Accounts governed by US Bankruptcy Code and the Commodity Exchange Act. Further information on these accounts is available here.
Please refer to ICE Clear Europe Circular No. C14/055 issued on May 2, 2014 which clarifies customer documentation requirements that Clearing Members must comply with.