Eurex Clearing, the clearing house owned by Deutsche Börse, will offer a new ‘direct’ membership structure for institutional investors.

The so-called ISA Direct service is set to debut this summer for interest rate swaps and repo transactions.

Listed derivatives and securities lending transactions are to follow.

The model combines elements of a direct clearing membership and the traditional service relationship in client clearing - tailored specifically for the buy-side.

Under the plans, the new membership type will allow investment firms to have a direct relationship with the clearinghouse.

Clearing agents, usually sell side banks, cover the default fund contribution, default management obligations and financing functions.

ISA Direct members maintain legal and beneficial ownership of collateral.

Eurex’s new service comes amid increasing challenges for fund managers.

A clearing obligation for standardised OTC derivatives in Europe will start in June this year in a phased approach.

The number of trading counterparts and clearing brokers (sell-side banks) continues to shrink and the cost for services not only related to derivatives, but also securities financing transactions is increasing due to significant capital charges.

“ISA Direct alleviates the regulatory requirement to centrally clear OTC derivatives in several ways,” said Daniel Berner, chief investment officer of Swiss Life Switzerland.

“By enabling us to become a direct member of the CCP, our concerns regarding counterparty credit risks, clearing costs and portability of our assets are much better addressed compared to the traditional client clearing model.”

Jason Vitale, managing director for listed derivatives & markets clearing at Deutsche Bank supports the roll-out.

“ISA Direct allows clearing members to continue their operational clearing relationship with clients without requiring the traditional performance guarantee," he said.