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The Iberian Energy Clearing House

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Segregation and Portability
Account Structure

OMIClear offers a flexible account structure which encompasses several alternatives in terms of segregation and portability, in compliance with the provisions set out in EMIR articles 39 and 48. The details of the account structure as well as of the applicable procedures in case of default are laid down in OMIClear’s Instructions “Registration Accounts and Clearing Accounts” (Instruction A05-2014) and “Procedures in Case of Default” (Instruction B18-2014). These rules are publicly available on OMICIear’s website, in the Downloads Section

In OMIClear there are two main types of accounts: Registration Accounts and Clearing Accounts. The former are held by the Clearing Members’ clients (typically “Non-Clearing Members” - NCM[1]) to record transactions[2] and the latter are held by Clearing Members for the positions bookkeeping and computation of margin and settlement responsibilities. Every Registration Account is linked to a Clearing Account which, depending on its nature, confers different levels of protection in terms of the segregation and portability of the underlying positions and collateral. Own trades and trades carried out on behalf of clients must be recorded in separate Registration Accounts.

Focusing now on the solutions offered by OMIClear, there are four types of Clearing Accounts:

1. Clearing Accounts with Individual Segregation (CAIS)

Only available for individual clients of the Clearing Member, these accounts aim to give the highest level of protection regarding positions and collateral, in case of default of the Clearing Member. Positions in this account are completely segregated from other positions cleared by the Clearing Member and the collateral allocated to this account is also completely segregated from collateral covering other accounts.

In case of default of the Clearing Member, the positions and collateral are immediately transferred to another Clearing Member as long as it authorises the transfer or if there is already a backup clearing agreement with such Clearing Member.  In fact, recognizing that the exercise of portability can be problematic if there isn’t a backup clearing agreement with a new Clearing Member, OMIClear concedes a 3 days period for the client to present the new clearing agreement. If at the end of such period no clearing agreement is delivered, the positions and collateral are transferred back to the defaulting Clearing Member. Nevertheless, such collateral can only be used to cover the losses for liquidating the positions in the individual segregated account.

2. Clearing Accounts with Omnibus Segregation (OSCA)

This type of account is aimed at groups of clients who wish to have their collateral and positions protected from a possible default of the Clearing Member. It ensures the same level of protection as the individual segregated accounts (ISCA) but applicable to the aggregate positions and collateral of the group of clients.

The positions of such clients are netted on this account for margining effects and are completely segregated from all other positions cleared by the Clearing Member. The collateral to cover this account is also segregated and recorded separately from other collateral posted by the Clearing Member. In case of default the portability of positions and collateral takes place under similar conditions as laid above for the individual segregated accounts but for the total positions and collateral  (partial transfers are not allowed).

It should be noted that the set of clients accessing this type of account must be properly identified within OMIClear and must appoint a representative, who is the contact person for communication issues and decisions regarding the portability of assets and positions.

3. Generic Omnibus Clearing Accounts (GOCA)

These accounts are aimed at recording the positions of the Clearing Member clients (NCM and others) who do not opt for individual or omnibus segregated accounts.

Positions of different NCM are completely segregated from each other and recorded in separate GOCA. If there are different NCM belonging to the same company group, they are allowed to clear through a single GOCA. The Clearing Member is allowed to have the positions of its clients that are not NCM held and netted on a single account.

Margins are calculated based on the positions recorded per each GOCA.

All Generic Omnibus Clearing Accounts share the same collateral, which is recorded separately from the collateral posted by the Clearing Member to cover its own positions as well as from the collateral covering individual segregated and omnibus segregated accounts.

In case of default of the Clearing Member, NCM and other known clients using GOCA are notified and are given three hours (counted within a clearing session) to request the transfer of positions to another Clearing Member. Such transfer can only take place if certain conditions apply, among which stands out the need to have already a clearing agreement with the new Clearing Member. Regarding collateral, its portability will only take place if all the positions of all generic omnibus accounts have been transferred within the time frame specified by OMIClear and if it has been shown the right to the claimed collateral. Otherwise, the collateral will remain available to close the positions of Generic Omnibus Accounts that have not been transferred. Nevertheless, if at the end of the default process there is a surplus of collateral, it shall be distributed among the NCM and clients on a pro rata basis with regards to their margin exposure but capped to their margin requirement.

4. Own Clearing Accounts (OCA)

The own clearing accounts can only be used to record the Clearing Member’s proprietary positions. Such type of account must be necessarily linked to a specific collateral submitted by the Clearing Member to cover solely its own positions as well as its responsibilities regarding the Clearing Fund contribution. In case of default of the Clearing Member, this collateral cannot be used to liquidate the positions of the Clearing Member’s clients, unless it is not necessary to liquidate the clearing member’s own positions.

The following table summarizes the differences between the different types of accounts.

Table 1: Positions and Collateral Segregation and Portability by Clearing Account Type

(1) Yes, if the Clearing Members’s client is an NCM. If the client is not an NCM the CM may opt to net the client’s positions with other clients that are not NCM.
(2) Group of clients (represented by 1 agent) agree to clear their trades through one single Clearing Account, to net their positions for margin effects and pledge  together one single collateral amount. Portability is activated through the clients’ representative.
(3) Clients using this type of clearing account type must all agree to transfer the total of positions / collateral to other Clearing Member.

Regarding costs, OMIClear charges fees for the opening and maintenance of accounts, which are publicly available in OMIClear’s pricelist.

In order to comply with article 5 (2)(4) of Delegated Regulation (EU) 153/2013, OMIClear initiated external independent legal opinions to confirm the effectiveness of its rules on the following matters:
  • Regime applicable to the close out netting in the event of insolvency of a participant;
  • Regime applicable to guarantees and segregation and portability of positions;
  • Safety of the bank guarantees demanded by OMIClear to its clearing members.
The above referred legal opinions are available to clearing members and its clients on an on request basis.

[1] The NCM are referred to in OMIClear’s rules as Registration Agents.

[2] The Registration Account is the mirror of the Trading Account in OMIClear’s platform. As such, the current Trading Accounts disclosed in MiClear system shall correspond to Registration Accounts.