How the DCP Model Works
The DCP risk management framework is based on collateral deposited with ECC and corresponding pre-trade limits. These limits define the trading capacity available to a DCP member and ensure that trading exposure remains within predefined boundaries.
The DCP risk management framework follows a straightforward principle:
- Deposit collateral with ECC
- Receive trading limits
- Trade within the available limits
- Monitor and adjust collateral and trading limit preferences as required
Trading Limits
Trading activity is controlled through pre-trade limits assigned in the respective trading systems.
The available trading capacity is determined based on:
- the collateral deposited with ECC
- limit preferences set by the member (e.g. distribution across markets)
- the applicable limit methodology
Trading orders can only be executed if sufficient trading capacity remains available.
Detailed information can be obtained from the following slide deck:
| Publishing date | Title | File |
|---|---|---|
| 2026-10-20 | DCP Limit Slide Deck | pdf (462 KB) |
DCP Limit Calculation – ECC Webinar
Florian Dorgerloh, Senior Clearing Operations Officer, explains in this webinar the basics of Base limits and how the DCP dynamic limit calculation works.
Notice: To activate the video, please click on the picture. Please note that after activation your data will be forwarded to YouTube.
Limit Tool
ECC provides an Excel-based simulation tool that helps members estimate the collateral required to support their expected trading activity and desired trading limits.
| Publishing date | Title | File |
|---|---|---|
| 2026-10-20 | DCP Limit Tool | xlsm (612 KB) |
| 2024-12-21 | Installation Guide DCP Limit Tool | pdf (237 KB) |
The following tutorial gives an overview of the tool and introduces the main functions.
In our tutorial on the DCP Limit Tool, Florian Dorgerloh, Senior Clearing Operations Officer, introduces you to the main functions. The tutorial covers:
- Overview of the interface
- Limit and collateral simulation for a single market
- Optimise limits and collaterals for multiple markets
- Market calendar & public holidays
Notice: To activate the video, please click on the picture. Please note that after activation your data will be forwarded to YouTube.
*DISCLAIMER
The information presented in this video tutorial does not constitute investment advice or an invitation to trade in goods or financial instruments but are for informational and educational purposes only. They do not constitute professional consulting advice but merely provide general information as starting point for your own considerations relating to your specific situation. Consequently, we assume no responsibility for any decisions made in relation to the content of this video. Also, we provide no guarantee, warranty or assurance that the information published is up-to-date and reserve the right to amend or supplement the information at any time without prior notice.
Cap Limit
The Cap Limit defines the maximum total trading limit available to a DCP member. It is determined by ECC based on the member’s financial strength and internally defined credit-risk criteria.
Important: Collateral deposited above the cap limit does not increase the member’s available trading limit.
The Cap Limit is determined during the KYC process and reassessed annually.
Operational Limit Management
DCP members can submit or amend their limit distribution preferences and, where applicable, define a base limit by using the form “O09 Limit Adjustment”.
The trading limit maintained for each market can be viewed in the ECC Member Area.
| Publishing date | Title | File |
|---|---|---|
| 2026-10-20 | DCP Limit Slide Deck | pdf (462 KB) |
Collateral Management
Collateral serves as the basis for a DCP member's trading capacity. The amount of collateral considered for the limit calculation determines the trading limits available to the member.
Accepted Collateral
- Cash funds in EUR and GBP (British Pound)
- Bank Guarantees in EUR and GBP (for further information please refer to Bank Guarantees as Collateral)
Use of Bank Guarantees
Trading limits of up to EUR 40 million may be fully covered by bank guarantees. For trading limits exceeding EUR 40 million, at least 50% of the amount above this threshold must be provided in cash collateral.
Example:
| Collateral Type | Amount |
|---|---|
| Bank Guarantee | EUR 45 million |
| Cash Collateral | EUR 5 million |
| Total Collateral | EUR 50 million |
Operational Collateral Management
Monitoring Collateral Balances
The ECC Member Area provides an overview of all collateral accounts maintained for a DCP member. The following account types may be displayed depending on the member's setup and collateral arrangements.
Collateral Account Types in the ECC Member Area
Overview of Collateral Accounts
| Collateral Account | Description |
|---|---|
| HLDNG_CASH_MRGN_EUR | Cash deposited at ECC in the collateral account and in currency Euro. |
| 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 | Maximum allowable limit for participant at which collaterals are capped. |
| 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 |
Increasing or Releasing Collateral
A DCP member communicates collateral changes, by submitting “O10 Cash Deposit and Release”. For submitting the form as well as for support concerning the collateral management process, please contact the Direct Clearing Team (contact at the bottom of this page).
Default Fund Contribution
The ECC Default Fund is an additional layer of financial protection designed to support the resilience of the clearing system in the event of a member default.
If a member defaults and the member's own collateral is not sufficient to cover the resulting losses, further financial resources may be required. The Default Fund provides such additional resources and forms part of ECC's risk management framework.
When a Contribution is Required for DCP Members
A Default Fund contribution is required for DCP members:
- trading products with delivery risk
- posting bank guarantees as collateral
Currently, delivery-risk-related contributions apply to UK Power Spot markets.
Amount and Eligible Contributions
Default Fund contributions must be provided in cash (EUR or GBP).
The minimum contribution equals:
- 4% of the relevant collateral supporting delivery-risk markets, or
- 4% of the posted guarantee value
depending on the applicable setup.