EU Client Clearing

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 will offer 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:

  • Customer Omnibus Accounts (Net Margin) for Futures and Options Clearing;
  • Customer Omnibus Accounts (Gross Margin) for OTC CDS Clearing;
  • Individual Segregation through Sponsored Principal Account; and
  • Individually Segregated Margin-flow Co-mingled Account (known as "ISOC").

INDIVIDUAL CLIENT SEGREGATION UNDER EMIR

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.

EMIR PROVISIONS FOR CLIENT ASSET SEGREGATION

Under EMIR, CCPs are required to provide clearing members with accounts that ensure the following:

  • Assets and positions held in the account of one clearing member can be distinguished from assets and positions held in the account of any other clearing member and from its own assets;
  • Enable each clearing member to distinguish their own assets and positions held in accounts at the CCP from those held for their clients. This account model is generally known as 'Omnibus Client Segregation' and is referred to under Article 39(2) of EMIR;
  • Enable each clearing member to distinguish a client's assets and positions held in accounts at the CCP from assets and positions held for other clients. This account model is generally referred to as 'Individual Client Segregation' and is referred to under Article 39(3) of EMIR.

Clearing Members are then required to offer these client protection options to their clients.

EMIR CLIENT CLEARING REQUIREMENTS: SEGREGATION AND PORTABILITY MODELS

Article 39 of European Market Infrastructure Regulation (648/2012)

CLEARING MEMBER DEFAULT MANAGEMENT

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

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 will be published shortly and clients of FCM Clearing Members should contact ICEClearEurope@theice.com for more information.

Additional Information

Legal Documents

PORTING DOCUMENTS

Customer Documentation

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.