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Eurex EnLight: Introduction of the EnLight Anonymous Negotiation functionality and clarification on reversal of anonymously negotiated trades

Release date: 29 Jun 2020 | Eurex Exchange

051/2020 Eurex EnLight: Introduction of the EnLight Anonymous Negotiation functionality and clarification on reversal of anonymously negotiated trades

Eurex Circular 051/20

1.   Introduction

With T7 Release 8.1, Eurex will offer EnLight users the Anonymous Negotiation functionality. This functionality will offer Requesters the possibility to send RFQs anonymously to Responders. During the whole negotiation process, the Requester identity or Responder quote specific identity will not be disclosed.

The Anonymous Negotiation functionality will be offered in Eurex EnLight with the launch of T7 Release 8.1 on 29 June 2020.

2.   Required action

Requesters will be able to request quotes on an anonymous basis by clicking the “Anonymous” box in the T7 GUI or choosing the anonymous workflow via ETI. Responders can filter anonymous RFQs by setting the Trade-to-Request ratio that must be at least met or exceeded by a Requester in order to receive anonymous RFQs. This Trade-to-Request ratio can be set by Responders in the T7 Admin GUI.

3.   Details

Eurex EnLight Anonymous Negotiation offers market participants the possibility to negotiate deals on Eurex EnLight without knowing the identity(ies) of the counterpart(ies). Requesters can define Responders (at least four) to request prices on an anonymous basis. Responders are being selected by Requesters, but when returning quotes, the Responders will be anonymous as well. To use the functionality, the Requester only has to select to negotiate anonymously. For Responders and Requesters, an outline of how to use the Anonymous Negotiation functionality is attached to this circular.

Clarification on the reversal process of EnLight anonymous trades

Participants can request the cancellation of off-book trades upon mutual agreement according to section 4.9 of the Conditions for Trading at Eurex Deutschland. Due to the nature of anonymously negotiated EnLight trades, however, both sides (Requesters as well as Responders) do not know with whom they finally traded. To address the problem that a bilateral reversal negotiation is not possible in case one counterparty wishes to reverse the trade, Derivatives Trading Operations will step in and act as agent between the counterparties. The process will be as follows:

A.   The counterparty that wishes to reverse the trade (“Counterparty A”) contacts Derivatives Trading Operations, authorises themselves and states that they wish to reverse an anonymous EnLight trade.

B.   Derivatives Trading Operations file the anonymous EnLight trade reversal request and try to get in contact with the other counterparty (“Counterparty B”) on a best-effort basis.

a.  In case the correct contact person of Counterparty B (usually the trader who entered or approved the trade) is available, Derivatives Trading Operations disclose the reversal request and ask if Counterparty B approves the reversal.

i.  If Counterparty B approves the request, the trade will be reversed and both involved counterparties will be informed about the reversal. In this case the anonymity is kept.

ii.  If Counterparty B declines the request, the trade will persist. However, both counterparties will be informed about the unsuccessful reversal request and the identities of the counterparties will be disclosed. The counterparties can then bilaterally negotiate a reversal.

b.  In case the correct contact person of Counterparty B was not available, the trade will persist. Both counterparties will be informed about the unsuccessful reversal request and the identities of the counterparties will be disclosed. The counterparties can then attempt to bilaterally negotiate a reversal.

Please note that Derivatives Trading Operations offer the agent service for anonymous EnLight trades only. Additionally, there is no guarantee that Derivatives Trading Operations will be able to contact the counterparty. Therefore, this service can only be offered on a best-effort basis.

Attachment:

  • Excerpt from the EnLight Handbook regarding EnLight Anonymous Negotiation

Further information

Recipients:

All Trading Participants of Eurex Deutschland and Vendors

Target groups:

Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination

Contact:

 

Equity & Index Sales: Philipp Schultze, philiipp.schultze@eurexchange.com;
Fixed Income Sales: Vassily Pascalis, vassily.pascalis@eurexchange.com;
Derivatives Trading Operations, eurextrading@eurexchange.com

Web:

 

Eurex EnLight

Authorised by:

Randolf Roth