This is a step-by-step outline to start clearing Eris Exchange products. The comprehensive outline suggests activities which firms have completed, but are not all required to become an Eris Exchange Clearing Participant. All PDFs referred to below can be found at the following URL: http://www.erisfutures.com/resources.
1. Register as a Clearing Firm with Eris Exchange
CME Clearing Member Firms are already eligible to certify as an Eris Exchange Clearing Firm and do NOT require purchasing additional shares, seats or contributing to a guarantee fund. Clearing Firms complete and submit the following agreements to register with Eris Exchange.
a. Eris Exchange Clearing Firm Agreement
b. Eris Exchange Clearing Firm ID Request Form
2. Approve CME New Release (NR) Environment Setup
Clearing Firm provides email confirmation to setup Eris Exchange TMF ID, sub-firm clearing ID to Clearing Firm’s existing CMF ID.
a. Eris Flexes are housed under the main Eris Exchange TMF. CME Clearing will automatically assign a position account under Clearing Firm’s Eris Exchange TMF ID for Eris Standards instruments by adding an ‘S’ at the end. For example, if the Eris Exchange TMF ID is 2C3, the Eris Standards position account would be 2C3S.
b. Clearing Firm adds Eris Exchange to existing CME NR Trade Register.
3. Configure Back-Office System for Trade Processing
If applicable, Clearing Firm obtains Eris module for back-office software. Contact service provider account representative for additional details on acquiring the Eris module.
Clearing Firm sets up Eris Exchange products by mapping to unique commodity codes in their back-office system. See trade ticker conventions page on the website for detailed information on the instrument ticker creation process.
a. Eris Standards:
i. Initial set: ZA9102, ZB9105, ZC9110, ZD9130
ii. Secondary set: ZA9202, ZB9205, ZC9210, ZD9230
b. Eris Flexes: One time setup of 146 product codes. Instrument tickers for the Eris Flexes are dynamically created upon trade execution.
4. Establish Customer/House Clearing Test Account(s)
Clearing Firm has the option of designating separate clearing accounts for Eris Standards and Eris Flexes.
a. Eris Standards:
i. Use existing customer clearing accounts that other traditional futures positions (i.e. CME Eurodollar and Treasury futures) are allocated to.
ii. Create new account for Eris Standards standalone positions.
b. Eris Flexes:
i. Create new customer clearing account.
ii. New account is mapped at the customer account level with CME Clearing. (Clearing Firm provides individual customer account number, customer account name, and related/parent account number).
iii. Clearing Firm determines the account structure for new account.
5. Conduct Test Trades in CME Clearing’s New Release Environment
Eris Exchange executes test trades in CME Clearing’s NR environment using Clearing Firm’s TMF ID to ensure that the back-office system is configured to support Eris Exchange trade notifications.
a. ECC generates test trades under the Clearing Firm’s TMF ID and specified account numbers and sends trade messaging via FIXML to CME Clearing Operations to upload into Clearing Firm’s NR clearing queue.
b. Clearing Firm retrieves test trades from CME clearing queue.
a. Test trades can also be verified in CME FEC+ by querying the Eris Exchange TMF ID.
6. Perform Margin Testing
Clearing Firms certifying for House and Customer accounts will need to provide test results for both types of accounts. 3
a. Eris Standards:
i. Clearing Firms select the Eris Standards positions for SPAN spread credits with CME Eurodollar, Treasury and/or Deliverable Swap Futures positions and report via PCS under the Eris Exchange TMF ID.
b. Eris Flexes:
i. Clearing Firms generate a daily customer position file for submission to CME Clearing.
ii. CME Clearing runs HVaR margin calculations.
iii. Clearing Firm consumes a CME output file containing the HVaR margin values.
iv. Clearing Firm overrides Initial Margin Requirement in back-office system.
7. Test Daily Position Reporting
Clearing Firm coordinates with the ECC to generate test files for the following daily reports.
Clearing Firms submit PCS reporting of Eris Standards positions under the Eris Exchange TMF ID.
Customer Gross Margining
Clearing Firms add Eris Standards positions to the daily submitted Customer Gross Margining (CGM) report.
Large Position Trade Reporting
Clearing Firms submit a Large Position Trade report directly to Eris Exchange for positions that qualify for reporting. See Eris Exchange Large Position Trade Reporting Process document for additional details.
a. ECC sets up Eris Exchange secure FTP folder and provides login credentials to the Clearing Firm.
b. Clearing Firm generates a Large Position file. File format provided in the LPTR process document.
c. Clearing Firm submits the Large Position file by 7AM CST.
8. Clearing Firm Generates Test Account Statement
Clearing Firm generates a test account statement validating the settlement price for each position, initial and variation margin requirements, and P&L calculations.
If applicable, Eris Exchange confirms initial margin requirements for margin offsets with CME Eurodollars, Treasury futures and/or the Deliverable Swap Futures via portfolio margining.
Clearing Firms generate a separate test statement for Customer and House accounts if certifying for both account types.
9. ECC Authenticates Clearing Firm as Certified Upon Successfully Testing all Required Steps
ECC provides email confirmation to Clearing Firms once all tests have been successfully completed.