CME Clearing Europe
ISDA/FIA Europe Client Clearing Addendum and FIA Europe Clearing Module:
Core Provisions and Mandatory CCP Provisions
1. To clear transactions through the Clearing House, Clearing Members and Clients are required
to have in place arrangements which meet the requirements set out in Chapter 3A of the
Rules.
2. For those Clearing Members and Clients who intend to satisfy this requirement by entering
into either the Client Cleared OTC Derivatives Addendum (Addendum) published by the
International Swaps and Derivatives Association, Inc. (ISDA) and the FIA Europe (FIA) or the
FIA Europe Clearing Module (Module), the Core Provisions and Mandatory CCP Provisions
applicable to transactions cleared through the Clearing House are set out below.
Core Provisions (Addendum):
Rule 2.3 (Limitation of liability and indemnity)
Rule 2.4 (Limited recourse)
Rule 2.5 (Clearing House insolvency)
Rule 2.12 (Governing law and arbitration)
Rule 2.14 (No proceedings)
Rule 3.7 (Actions available to the Clearing House)
Rule 3.8 (Termination of clearing membership)
Rule 3.9 (Suspension)
Chapter 3A (Client Clearing)
Chapter 5 (Clearing)
Chapter 8 (Default)
Rule 9.2 (Investigations)
Rule 9.3 (Investigation process)
Chapter 10 (Settlement finality)
Mandatory CCP Provisions (Addendum and Module):
Rule 3A.1 (Clearing for Clients)
Rule 3A.2 (Client Agreement)
Rule 3A.3 (Collateral)
3. The Appendix provides a summary of the Rules which are hereby designated to constitute
Core Provisions and/or Mandatory CCP Provisions.
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Appendix
Explanatory Summary
Core Provisions
Provisions which the Addendum describes as relating to Client transactions including provisions that
establish the basis for Client transactions and the consequences for a Client if the Clearing House
declares the Clearing Member in default.
Rule
Rule 2.3
(Limitation
indemnity)
Description
of
liability
and
Sets out the extent of the Clearing House’s and Clearing Member’s
liability, including with respect to client clearing. The provision also
sets out the indemnity given by the Clearing Member in favour of
the Clearing House
Rule 2.4
(Limited recourse)
Sets out the limitations on recourse against the Clearing House
Rule 2.5
(Clearing House insolvency)
Sets out the triggers which would constitute a Clearing House
insolvency and the process to be followed upon a Clearing House
insolvency
Rule 2.12
(Governing law and arbitration)
Outlines the governing law applicable to the Rules and the
arbitration provisions
Rule 2.14
(No proceedings)
The Clearing Member undertakes not to bring, in respect of certain
events, proceedings against the Clearing House
Rule 3.7
(Actions
available
Clearing House)
to
Rule 3.8
(Termination
membership)
clearing
of
the
Outlines the actions available to the Clearing House to protect the
integrity of the clearing arrangements or to avoid the introduction of
uncertainty, volatility or risk into the financial markets
Sets out the right of both the Clearing Member and the Clearing
House to terminate the clearing membership of such Clearing
Member
Rule 3.9
(Suspension)
Provides that a Clearing Member who is suspended will not be able
to submit transactions for clearing
Chapter 3A
(Client Clearing)
This chapter relates to client clearing and includes:
- an obligation to enter into certain client clearing documentation;
- provisions relating to pre-default porting;
- rights of the Clearing House to amend certain client clearing
documents; and
- some of the actions available to the Clearing Member following
a Client default
Chapter 5
(Clearing)
Outlines the process of submitting transactions to the Clearing
House (including restrictions on submission), the novation of such
transactions, the ability to transfer contracts between Clearing
Members and the right of the Clearing House to avoid contracts in
certain circumstances
Chapter 8
(Default)
Sets out the triggers which would constitute a default by the
Clearing Member and the right of the Clearing House to designate
a Declaration of Default with respect to such defaulting Clearing
Member. The Chapter also outlines the options available to the
Clearing House, including the processes involved, to port or closeout contracts and collateral
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Rule 9.2
(Investigations)
Provides the Clearing House with a right to investigate breaches, or
alleged breaches, of the Rules and an obligation on the Clearing
Member to cooperate with such investigations
Rule 9.3
(Investigation process)
If an investigation has been initiated, this Rule summarises the
investigation process and the actions available to the Clearing
House
Chapter 10
(Settlement finality)
The Clearing House is a designated system for the purposes of the
Settlement Finality Regulations. Accordingly the system benefits
from certain modifications to the general law of insolvency, seeking
to minimise the disruption to a system caused by insolvency
proceedings brought against a participant in the system
Mandatory CCP Provisions
Terms which the Addendum and the Module each describe as those which the Clearing House
requires their Clearing Members to include in the arrangements entered into with Clients.
Rule
Description
Rule 3A.1 (Clearing for Clients)
Sets out the conditions for client clearing, including an obligation on
the Clearing Member to obtain certain acknowledgments from the
Client
Rule 3A.2 (Client Agreement)
Sets out the terms mandated by the Clearing House for inclusion
between the Clearing Member and Client
Rule 3A.3 (Collateral)
Sets out the terms mandated by the Clearing House relating to
collateral transferred between the Clearing Member and Client
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