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Account Structure

Because Nasdaq offers several solutions for house and client trading and clearing, a number of account types are available. In the individual client account structure, thousands of clearing accounts can and do exist. Account information concerning registered transactions, margin requirements and other information including re-registration, cash settlement and delivery is generated and sent to the appropriate clearing member. The clearing member is obliged to forward relevant information to the clients.

The accounts described below are offered for derivatives trading and clearing at Nasdaq. Please see overview of account properties:

 

House Account

A house clearing account is an integrated trading and clearing account for the member’s trading and clearing on its own behalf. The member may not use the house clearing account for trading and clearing of transactions in respect of entities within the same group of companies as the member.

Omnibus Accounts

The omnibus account is an integrated trading and clearing account for the aggregated positions of several clients. Members can choose to set up several omnibus accounts for administrative purposes, with or without client segregation.

Omnibus Accounts

The omnibus account is an integrated trading and clearing account for the aggregated positions of several clients. The clients do not have any agreement with Nasdaq. Thus, Nasdaq does not become the counterparty to each and every client with positions on the omnibus account but only to the clearing member that holds the omnibus account. As a consequence, the clients have credit risk against the clearing member. No automatic position netting is done on this account. Thus any position netting must be done by the clearing member to maintain a correct picture of all client positions on the account. The margin is calculated from the total position on the account as a netted total portfolio (i.e., the correlation between all instruments and full netting is used). 

Sub-Accounts

To reduce operational risk and ease the post-trade administration, Nasdaq offers the possibility to connect subaccounts to an omnibus account as a service to its members. A sub-account is an account opened by the clearing member for administrative purposes only. It is possible to trade directly on the sub-account and the position will remain on that account. On the sub-account, the member will benefit from having easily accessible historic trade information. Expiration and all types of post-trade flows are calculated on the sub-account for informational purposes only.

Nasdaq has the legal relationship with the member; it is the aggregated position and flows on the omnibus account level that will be considered in communications between the member and Nasdaq. By using sub-accounts, the clearing member will be able to take advantage of post-trade administration opportunities, calculated settlement flows and margins down on client level. The use of sub-accounts does not affect the member’s obligations to Nasdaq.

Margins are calculated on sub-account level (for informational purposes) to the clearing member, but the total margin that the clearing member will have to pledge to Nasdaq is calculated on the omnibus account level. Sub-accounts can be set up with or without automatic position netting. A sub-account set up with automatic position netting is eligible for volume fee discounts and must be designated for one single client. This requires the clearing member to enter the “Designated Sub-accounts Discount Agreement”.

Allocation Account

An allocation account is a trading-only account that propagates the position to a specified clearing account with a clearing member. Several allocation accounts can be linked to one single clearing account. To open an allocation account and link it to a clearing account with another clearing member, the executing and clearing members must enter into an allocation agreement. Allocation accounts cannot be linked to individual client accounts that are set up with client agreements.

Single-Client Account

The single-client account is an integrated trading and clearing account for one individual client, e.g. a non-clearing member. The member may choose to set up these accounts with or without client segregation.

NCM Accounts

NCM accounts have the same functionality as member accounts but contracts recorded on any NCM account are deemed to be recorded on a single client account. A dedicated member ID is set up for the NCM and all clearing flows are propagated to the GCM on the member ID level.

Single Client Accounts

An individual client account can also be set up, in which case the client’s identity is normally registered with CCAB. A sponsored access solution is available for members that prefer it. Allocation accounts and sub-accounts may be linked to single client accounts in the same manner as to omnibus accounts.

Additional Accounts

For clients acting as liquidity providers, one or several liquidity provider accounts are set up under a liquidity provider member ID designated for this client. A client must have the right to use sponsored access in order to be a liquidity provider.

Indirect Pledge Account

This is an integrated trading and clearing account with common functions for trading and clearing that cannot be connected to other clearing accounts. There is a legal relationship between Nasdaq Clearing and the client in this setup and an option to connect several sub-accounts to each indirect client account. It is possible to set up sub-accounts under this account.

ICA Account

The individual client segregated account is an integrated trading and clearing account for one individual client where positions and collateral are fully segregated in order to offer portability arrangements. Typically, NCM's and larger institutions will use this clearing account structure. 

The ICA Model

Nasdaq Clearing has introduced a completely new account type to the current range of options available. This account type is called an “individual clearing account” (ICA).
In short, in the ICA model, the liability is between the member and Nasdaq. The client will post collateral to the member and the member will in turn post collateral to the clearinghouse. The collateral posted by the member does not have to be the same as that posted by the client, but must have the equivalent value. The ICA client will have its own custody account with Nasdaq where the member posts the collateral on behalf of the ICA client. The member will also handle all contributions to the default fund on behalf of its ICA clients.

Procedure and Forms

The first step to take when opening ICA-accounts is to contact Nasdaq in order to agree on a suitable time plan and possible migration dates for your clients. The time frame for opening new ICA accounts depends on the number of requested accounts from all banks. In general, Nasdaq will need 5 bank days to set up the systems after receiving complete documentation.

There are two main documents necessary to open an ICA account:

  • Collateral Custody Account Agreement 
    Filled out by the account owner, i.e. the member. In the field "Supplemental details", please fill out information about the underlying client (company name + organization number).
  • ICA Opening Form
    Presents information about the underlying client, but shall be signed by the member.

Other documentation (will be received directly from Nasdaq upon contact):

  • SSI – Cash and/or securities. It is possible to use the same SSI for all your ICA accounts.
  • Re-registration form – If the migration to the new ICA account requires any transfer of positions from an old account you need to submit a re-registration form.

Clearing Clients

A Clearing Client (CC) is an entity that has been approved by the clearing house to clear its own transactions,  that have been entered by a Client Representative. The Clearing Client is account holder of the clearing account. A Clearing Client is not a member of the exchange, but trades through a Client Representative. The Clearing Client is authorized to handle its own settlement and post its own collateral, but can also agree to outsource this to the Client Representative. This account type is only available for commodities members.

Direct Pledge Client Accounts

This account type can be used by clients that trade through a number of different executing members, but wish to consolidate their positions into one single clearing account with one clearing member to benefit from netting. Typically, large institutions trading with several banks or brokerage firms use this account structure. This account type is only available for financial members.

DP Accounts

Trading and clearing accounts are set up separately

  • B1 Clearing Account:
    The B1 Account is clearing only.
  • B2 Trading Account:
    The B2 account is trading only. Several B2 accounts set up with different members can be linked to one B1 account. The B2 account has automatic position propagation to the B1 account. When a trade is registered on the B2 account, its position is automatically recorded on the linked B1 account.

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