Buffer stop: Eurex clearing members shunt default fund
Clearing house’s CRO says both members and clients opt to pay more margin instead
In the delicate relationship balance between banks and exchanges, banks regularly bemoan the fact that exchanges carry more weight. But at Eurex Clearing, it seems clearing members can also put their thumb on the scale.
Last year, when the clearing house proposed adding a 15% operational buffer to its default fund – instead of enforcing the standard principle of ‘defaulter pays’ by way of increased margins – its clearing members pushed back.
The purpose of the buffer, according to Eurex, was to
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