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ARTICLE · 28 JUNE 2024

EUR A Copycat: Europe's New US-style Clearing Model

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The FIA has announced the development of a new European Agent Trustee Model (EATM) for client clearing of OTC derivative transactions.

GlobalFinance and Banking
Kartik Iyer
Kartik Iyer
Will Sykes
Will Sykes

The FIA has announced the development of a new European Agent Trustee Model (EATM) for client clearing of OTC derivative transactions.

This model broadly mirrors the US-style agency model, under which a trading fund is a client of a central counterparty/clearing house (CCP), but a clearing member (i.e. a clearing broker, referred to as a ‘Futures Commission Merchant') acts as agent on behalf of the fund. The new model has been developed in conjunction with clearing members and European CCPs.

The EATM is designed to complement, rather than substitute, the existing ‘principal' model in Europe under which the fund has a direct relationship with a clearing broker (the client leg), which in turn contracts with the CCP and enters into transactions matching, but opposite to, those under the client leg.

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