Euronext Clearing operates as cardinal multi asset clearing house within the Euronext Group.
Our services are structured to cover a broad range of trading venues and asset classes:
- shares, warrants and convertible bonds listed on Euronext Milan,
- ETFs and ETCs listed on ETFPlus,
- stock, index futures and options listed on IDEM Equity as well as energy futures listed on IDEX,
- futures on durum wheat listed on AGREX,
- closed-end funds,
- investment companies and real estate investment companies listed on Euronext MIV Milan,
- Italian Government bonds listed on MTS, EuroMTS, ICAP BrokerTec,
- Italian Government bonds and corporate bonds listed on MOT, EuroTLX and Hi-MTF.
Euronext Clearing activities as Central Counterparty are structured on the following segments:
- Equity Derivatives
- Energy Derivatives
- Agricoltural Commodities Derivatives
- ICSD Bonds
Highly Diverse Product Offering on multiple Asset Classes and Financial Markets
Multi-Asset Capabilities with Direct Connectivity to a Wide Range of Markets and Open Access Settlement
Robust Risk management Scheme
In a fast changing and intense competitive and regulatory environment, Euronext Clearing is at the fore front in offering a robust and efficient risk management system and to protect its Clients with asset segregation and state of the art margining methodology.
In particular Euronext Clearing’s financial safeguarding system is based on the following 3 levels of protection:
1. Membership requirements
Clearing Members must meet minimum Supervisory Capital requirements in accordance with their role (ICM or GCM) and the segment they want to . Each Member must have an organisational structure and IT systems that guarantee the ordered, continuous, and efficient management of the activities and relations foreseen by Euronext Clearing Rules.
2. Margin system
Members must deposit sufficient guarantees to cover the theoretical costs of liquidation, which Euronext Clearing would incur in the event of a Member’s Default, in order to close the open positions in the worst reasonably possible market scenario. All Clearing Members are therefore required to pay margins on all open positions.
Margins are calculated using the MARS methodology (Margining System) for the IDEM and Share BIt markets, and MVP (Method for Portfolio Valuation) for the MTS and BrokerTec markets. These are efficient, reliable and accurate systems for calculating margins. MARS is capable of recognizing the overall risk in a portfolio and allows for the offsetting of risk between closely correlated products, as well as allowing for cross-margining between derivatives and equity cash products in the portfolio.
Euronext Clearing has also introduced additional protection, which functions alongside the margins system, consisting of the Default Fund to cover that portion of the risk, generated by extreme variations in market conditions, that is not guaranteed by the margin system.
3. Default procedure
The procedure envisages the allocation of the losses and costs sustained by Euronext Clearing following the default of a Clearing Member according the below hierarchy (i.e. "default waterfall") set out in Euronext Clearing’s Rulebook Article B.6.2.3):