Direct Clearing Participant (DCP) Model
Trading Limit Management
For the Direct Clearing Model, pre-collateralized trading limits are set with the exchange for each market. Direct Clearing Participant Clearing Member (DCP CM) can execute trades as long as their exposure stays below the collateralized trading limits.
The trading limit of a DCP CM is derived from the collateral amount the DCP CM posts with ECC. Twice a business day, the exact outstanding risk exposure will be determined and taken from the collateral position. The remainder becomes available for the trading limit distribution. This so-called “Dynamic Limit” gives DCP CM’s a high degree of trading flexibility, making most of the posted collateral available for trading.
A DCP CM communicates the limit distribution preferences and (optional) base-limit, by submitting the form “O09 Limit Adjustment”.
For submitting the form as well as for support concerning the limit management process, please contact ECC Clearing Operations Team on the following email address: clearing@ecc.de.
The DCP CM can see the trading limit set for each market in the ECC Member Area.
Collateral Management
To collateralize the trading limits, DCP CM´s can deposit collateral with ECC as defined in the clearing conditions.
Currently accepted collaterals for DCP CM´s are:
- Cash funds in EUR and GBP
- Bank Guarantee in EUR and GBP (by ECC approved guarantors and using ECC approved bank guarantee wording template for DCP CM. For further information please refer to Bank Guarantees as Collateral)
All collaterals for a DCP CM are booked in a delivery account in ECC’s settlement system SMSS. For each margin type and currency, a separate delivery account is set up. The member can monitor the balance of his collateral accounts via ECC’s Member Area.
| SMSS Collateral Management | Description |
|---|---|
| HLDNG_CASH_MRGN_EUR | Maximum allowable exposure for participant at which the collaterals are capped. |
| HLDNG_CASH_FUND_EUR | Cash deposited at ECC in the clearing fund account and in currency Euro. |
| HLDNG_CASH_MRGN_GBP | Cash deposited at ECC in the collateral account and in currency British Pound. |
| HLDNG_CASH_FUND_GBP | Cash deposited at ECC in the clearing fund account and in currency British Pound. |
| HLDNG_CASH_CAP_EUR | Credit limit given in currency Euro determining the total trading limit. |
| GUARANTEE_XXXX_EUR_DMS | Guarantee provided from an accepted guarantor – guarantee amount will be booked at the collateral account in Euro. Were XXXX is the shortcode of the relevant guarantor |
| GUARANTEE_XXXX_GBP_DMS | Guarantee provided from an accepted guarantor – guarantee amount will be booked at the collateral account in British Pound. Were XXXX is the shortcode of the relevant guarantor |
Cash Collateral payments resulting from adjustments of collateral are shown in ECC’s payment reports and will be settled according to the financial settlement process for DCP CM’s.
Any increase of collaterals provided before 14:00 CET, will be considered the next business day at 16:00 CET.
Any decrease of collaterals provided before 12:00 CET will affect the trade limit as of 16:00 CET, while payout is released 3 business days later in most cases.
A DCP CM communicates these collateral preferences, by submitting the form “O10 Cash Deposit and Release”. For submitting the form as well as for support concerning the collateral management process, please contact ECC Clearing Operations Team on the following email address: direct.clearing@ecc.de.
Default Fund
DCP CM’s are required to contribute to the ECC clearing fund according to section 3.7 of the ECC Clearing Conditions. Accepted contribution for the ECC clearing fund is Euro & British Pound cash only. In case of a DCP CM’s default, its collateral and clearing fund contribution are used to cover the resulting shortfall. If that is not sufficient, ECC’s dedicated own resources and subsequently the default fund contribution of all other DCP CM’s are used. Finally, the remaining clearing fund is used.
A minimum default fund contribution of a DCP CM is defined as a percentage of its total trading limit.
ECC performs daily stress tests. If the calculated shortfall from the stress test exceeds the DCP CM’s clearing fund contribution including ECC’s dedicated own resources, the amount of exceedance is allocated to the DCP CM as an additional clearing fund contribution proportional to their current shortfall.