European Markets Infrastructure Regulation (Disclosures pursuant to EMIR Article 39)
Based on article 39(5) of the European Markets Infrastructure Regulation, Regulation (EU) No. 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) ABN AMRO Clearing Bank N.V. (AACB) is required to inform you about (“disclose”) the level of legal protection and costs associated with the different account structures. This section contains the following information: General information about EMIR Account Segregation Pricing Portability & Legal Protection per CCP Disclaimer
Based on article 39(5) of the European Markets Infrastructure Regulation, Regulation (EU) No. 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) ABN AMRO Clearing Bank N.V. (AACB) is required to inform you about (“disclose”) the level of legal protection and costs associated with the different account structures. This section contains the following information:
General information about EMIR
Portability & Legal Protection per CCP
This section only applies to clients of ABN AMRO Clearing Bank N.V.
General Information about EMIR
EMIR is a set of standards for the regulation of derivatives, central counterparties (CCPs) and trade repositories (TR). EMIR is a European regulation that applies to any entity established in the European Union/European Economic Area (EU/EEA) that transacts in derivatives (listed as well as OTC).
Various national as well as European regulatory and governmental bodies have published information about EMIR. They can be consulted for additional information.
The Legal Entity Identifier (LEI) from ABN AMRO Clearing Bank N.V. is: G8ZTNESVNKW4NN761W05
CCPs based in the EU/EEA are currently seeking authorisation from their national competent authority (“NCA”) to clear derivative products under EMIR. When a CCP is authorised to clear the relevant class of derivatives pursuant to EMIR, AACB is under the obligation to offer the clients for which it acts as General Clearing Member (GCM) the choice between at least two types of account setups at CCP level. This minimum required offering includes (i) individual segregated accounts (”ISA”) and (ii) omnibus segregated accounts (”OSA”).
New account structures offered pursuant EMIR (Segregation)
AACB offers you the choice between an ISA and OSA account per CCP. Such accounts have different structures, levels of protection and come at a different cost. The key elements of an ISA and OSA are described in more detail below. In both setups, AACB will offer you a client account at CCP level which enables AACB to distinguish client collateral and positions (“the client account”) from AACB’s own collateral and positions (“the house account”).
Article 39(10) of EMIR provides that assets (in respect of segregation and portability) refers to collateral held to cover positions and includes the right to transfer assets equivalent to that collateral or the proceeds of the realisation of any collateral.
Omnibus Segregated Account (OSA)
An OSA offers you omnibus account segregation as set out in article 39(2) of EMIR. This account setup is similar to your current account setup with AACB. In an OSA account, multiple derivative positions and collateral of clients are being combined. In this setup, you will keep on benefitting from the netting opportunities which will reduce your overall costs and charges. The OSA is the minimum level of segregation required under EMIR. It has the following features: The CCP keeps separate records and accounts that distinguish the collateral and positions of the clients in the omnibus account from AACB’s house account and/or other client accounts:
The CCP keeps separate records and accounts that distinguish the collateral and positions of the clients in the omnibus account from AACB’s house account and/or other client accounts;
Depending on the account setup at CCP level (gross or net), collateral in the OSA may be netted;
Netting of collateral and positions across house and client accounts is not allowed;
Collateral held at CCP level that covers derivative positions within the OSA is not exposed to potential losses in AACB’s house account and/or other client accounts;
Client collateral in the OSA may be used to cover other client’s positions within the OSA;
Excess collateral may be held by AACB.
Individual Segregated Account (ISA)
The ISA is a new type of account setup aimed at achieving individual account segregation as described in article 39(3) of EMIR. As a client, your derivative positions and collateral are distinguished from other clients positions and collateral as well as AACB’s own positions, enabling you to achieve the most optimal form of segregation. Therefore, the ISA offers you the highest level of legal protection for your derivative positions and collateral. The key features of the ISA are:
Derivative positions and collateral are placed in separate individual accounts at the CCP and are distinguished from other client accounts and AACB’s house account;
Derivative positions from the client within the ISA are netted, but netting is not allowed across accounts of different clients;
Collateral covering the positions in the ISA is not exposed to losses outside the ISA;
Excess margin cannot be held by AACB: all collateral called by the Clearing Member (CM) must be passed on to the CCP, including collateral called in excess.
CCP Pricing (PDF 10 KB) (pdf)
ABN AMRO Clearing Pricing (PDF 153 KB) (pdf)
Portability & Legal Protection per CCP
Under the EMIR rules, AACB is required to comply with the portability requirement. Portability can be defined as the transfer of clients positions and assets to another clearing member designated by the client if AACB as GCM defaults. Article 48 of EMIR describes the circumstances and parameters under which (i) a CCP must transfer the positions and assets of the clients of a defaulting clearing member to (a) designated back-up clearing member(s), or (ii) may liquidate such positions and assets. Porting positions and assets to another clearing member in a “business-as-usual” situation is possible at all times. The portability requirement is applicable to both ISA and OSA accounts. The main exception is that in an OSA account the back-up clearing member must be designated by all clients in the account.
For ISA accounts, note that if the client has not designated a back-up clearing member prior to the default of the client’s primary clearing member and has not agreed that the CCP may choose a back-up clearing member, porting may be less likely to occur.
Unless explicitly agreed otherwise, AACB provides its clearing services under the Dutch law concept of a mandate agreement (lastgeving). A mandate agreement is a service provision agreement under which one of the parties, (the "mandatory") has engaged itself towards the other party (the "mandator") to perform one or more juridical acts for account of the mandator (article 7:414(1) Dutch Civil Code). When AACB as mandatory enters into transactions pursuant to the clearing agreement, it does so as an intermediary for the client, but in its own name as an independent principal market participant, holding all positions in its own name. However, AACB will act for the account and risk of the client, meaning that all profits, costs and losses that are related to such transactions and positions are for the account and risk of the client.
Per 1 April 2016 the Dutch Giro Securities Act (Wet giraal effectenverkeer) provides that derivatives contracts or positions that AACB enters into as an intermediary (tussenpersoon) for the risk and account of a client, pursuant to the clearing agreement between AACB and the client, will be legally segregated from AACB's bankrupt estate (boedel). The segregation will include collateral provided in connection with such derivative contracts or positions; excess collateral provided to AACB will not be included. Only clients that have rights and obligations towards AACB ("client-positions") corresponding with those of AACB under the cleared transactions ("corresponding positions") are entitled to the segregated pool in AACB's bankruptcy. As set out in the explanatory notes to the Dutch Giro Securities Act, the "client-positions" do not need to be documented as a separate derivative transaction matching the terms of the "corresponding position" (that AACB has towards a CCP); also economic positions created via a mandate agreement qualify as client-positions.
As a result, derivatives contracts and positions entered into by AACB as intermediary for the risk and account of a client may in case of AACB's bankruptcy be ported to a back-up clearing member or, when porting is not possible, liquidated. In case of liquidation the proceeds of such liquidation will in principle not become part of AACB's bankrupt estate.
Legal Protection per CCP
CCPs are required to disclose their respective levels of legal protection and the applicability with the different insolvency regimes within the EU/EEA. AACB has reached out to the CCPs listed below to obtain such information. We have not yet received opinions from all CCPs. This section will be regularly updated as soon as more information becomes available.
Legal protection per CCP (PDF 10 KB) (pdf)
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