Customer Protection & Segregation

On the basis of input from clients and in anticipation of EMIR requirements, our enhanced client protections provide clearing members and their customers with a choice of protection levels, through a variety of account structures and segregation options.

Account structures and supporting documentation are designed to deliver transparency and legal certainty with regard to the treatment of client positions and assets should a clearing member default.

 

The customer protection and segregation options are not product specific and are available across all asset classes.

Fully Segregated Account

This unique form of Client account offers more collateral protection than any other account available.

  • It is linked to a dedicated account at a custodian chosen by the client in CMECE's name and specifically relates to the clearing member and client.
  • The client may deliver to the Fully Segregated Account, in the form of securities, all or some (as specified by the clearing member and client) of the margin called for the Fully Segregated Account without going through the account of the clearing member.
  • Assets in the Fully Segregated Account are segregated from those relating to any other clearing member or client.
  • Provides certainty to clients that in the event of a Clearing Member or CMECE default, all securities can be ported or returned.
  • This account offers protection against the possibility of CMECE's insolvency as securities recorded in each Fully Segregated Account are secured in favour of a security trustee for the benefit of the relevant clearing members and clients.
  • This account requires additional documentation to be entered into by both the clearing member and client.
  • The account may assist the clearing member and (if applicable) client to benefit from a preferential risk weighting under the Capital Requirements Regulation in respect of the securities in the Fully Segregated Account.

Individually Segregated Account

  • Positions are recorded by clearing member and client (i.e. the whole account).
  • The value of the assets is recorded in respect of the whole account (cash value and value of each type of securities with asset identifier allocated to clients).
  • Non–cash assets are held in a commingled account with a Central Securities Depository or Precious Metals Depository. Cash is invested as required by EMIR.
  • Porting would be easier to facilitate than in an Omnibus Client Account as CMECE would have more information about the client's positions and assets.
  • No risk of mutualisation between different Individual Client Accounts.
  • Excess assets in the account cannot be used to offset any loss suffered by a client in any other account.

Omnibus Segregated Account

  • Positions are recorded by clearing member and, where known, client.
  • The value of the assets is recorded in respect of the whole account (cash value and value of each type of securities).
  • Non–cash assets are held in a commingled account with a Central Securities Depository or Precious Metals Depository. Cash is invested as required by EMIR.
  • Positions of different clients are not netted and margin is called on a gross basis.
  • On default only, provided CMECE has enough information from the clearing member, the account is notionally divided per client so that CMECE will attempt to port positions identified as relating to different clients to different adopting clearing members.
  • If the clearing member defaults, each client takes risk against the others recorded in the same account.
  • Excess assets in the account can be used to offset any loss caused or suffered by other clients in the same account.

 

 

CME Clearing Europe offers the following client account structures:

CMECE account structures
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CMECE account structures
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CMECE account structures
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