Clearing derivatives under EMIR — CCP account structures
To assist derivatives market participants in choosing an account type, this note considers the difference between the account options available and certain potential benefits or risks associated with them. We do not consider the impact of national insolvency laws.
Why do I need to consider CCP account structures?
A number of central counterparties (CCPs) have now received re-authorisation from their national regulator under the European Market Infrastructure Regulation (EMIR). EMIR requires CCPs and their clearing members (CMs) to offer a choice of accounts that provide varying degrees of segregation of positions and margin. While the implementation of mandatory clearing for over-the-counter (OTC) derivatives in Europe is still a number of months away, users of exchange-traded derivatives (ETDs) need to choose between the different account types now.
What are the options available?
CCPs must offer CMs a choice of accounts providing, as a minimum, individual client segregation (ICS) and omnibus client segregation (OCS). In turn, CMs must offer their clients at least these two structures and inform them of the costs and level of protection for each option. While EMIR mandates that CCPs (and CMs) must offer OCS and ICS, CCPs are generally offering a range of options of OCS accounts. Therefore, even where the decision is made to elect an OCS account structure, clients of CMs will need to choose between different OCS accounts. We have included a summary of the primary account types at the end of this note…
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