Futures Industry Association releases new client clearing model in Europe
04 December 2025 Europe
Image: vicky/stock.adobe.com
The Futures Industry Association (FIA)-sponsored European Agent Trustee Model (EATM) has now gone live at LCH for its SwapClear service.
The move marks an important milestone in a multi-year project between FIA, a consortium of bank clearing members, two European clearing houses, and external counsel.
The EATM is a new client clearing model designed to broadly replicate the futures commission merchant (FCM) clearing model in the US, with the aim of increasing the clearing capacity of globally systemically important bank (G-SIB) clearing members.
It is intended to co-exist with, rather than be a substitute for, other clearing models available in Europe, notes the FIA.
Mitja Siraj, FIA鈥檚 vice president of legal, Europe, says: 鈥淚t has historically been difficult to design a clearing model outside the US that substantially replicates the US FCM clearing model, due to some uncertainty about the legal basis of that model.鈥�
Recent legal memoranda prepared for FIA and the International Swaps and Derivatives Association (ISDA) by external counsel, have provided more clarity and enabled the articulation of the legal relationships underlying the US FCM clearing model.
Siraj continues: 鈥淭his has made it easier to reverse engineer that model. What has been a statutory construct unique to the US legal system has now been replicated through different arrangements that are referred to as agent-trustee structures outside the US.鈥�
Five years in the making, the EATM has been created by FIA in collaboration with Bank of America, Barclays, Citi, Goldman Sachs, and J.P. Morgan, as well as LCH, Eurex Clearing, and Linklaters.
It was initially designed for use with OTC derivatives, but could be extended to exchange traded contracts, subject to demand.
The EATM has been developed under English law, with an equivalent structure currently being developed under German law.
Under the EATM (English law), clearing members may enter trades with a CCP on behalf of their clients and hold those trades on trust for those clients.
This, says the FIA, differs from Europe鈥檚 predominant 鈥榩rincipal model鈥� in which clearing members act as financial intermediaries between their clients and the CCP.鈥�
This means that under the EATM, a clearing member is party to one transaction 鈥� the client transaction with the CCP, whereas under the principal model, it is party to two transactions 鈥� one with the CCP and one with the client.
The aim of the EATM is to bolster capacity, particularly among G-SIB clearing members, which face additional capital charges when they clear OTC derivatives for their clients under the principal model.
Walt Lukken, FIA president and CEO, says: 鈥淏y effectively removing the double-counting, the EATM will help increase the capacity of clearing members offering client clearing in Europe through cost savings and efficiencies.
鈥淭he EATM provides welcome capacity for clearing services at a time of unprecedented growth in our markets.鈥�
The launch by LCH鈥檚 SwapClear marks the go-live of the EATM (English law) model 鈥� this means that UK-based clearing members of SwapClear can offer the EATM to their clients, irrespective of their clients鈥� location.
Eurex Clearing is in the process of implementing the same model and will inform market participants once it has been completed. Both CCPs also intend to implement the EATM in due course for Germany-based clearing members.
While LCH and Eurex Clearing have been involved in the project from the start, the EATM is designed to be CCP-neutral and can be offered by any European CCP.
It has also been designed to ensure there is minimal disruption to existing CCP operations, processes and rules.
The move marks an important milestone in a multi-year project between FIA, a consortium of bank clearing members, two European clearing houses, and external counsel.
The EATM is a new client clearing model designed to broadly replicate the futures commission merchant (FCM) clearing model in the US, with the aim of increasing the clearing capacity of globally systemically important bank (G-SIB) clearing members.
It is intended to co-exist with, rather than be a substitute for, other clearing models available in Europe, notes the FIA.
Mitja Siraj, FIA鈥檚 vice president of legal, Europe, says: 鈥淚t has historically been difficult to design a clearing model outside the US that substantially replicates the US FCM clearing model, due to some uncertainty about the legal basis of that model.鈥�
Recent legal memoranda prepared for FIA and the International Swaps and Derivatives Association (ISDA) by external counsel, have provided more clarity and enabled the articulation of the legal relationships underlying the US FCM clearing model.
Siraj continues: 鈥淭his has made it easier to reverse engineer that model. What has been a statutory construct unique to the US legal system has now been replicated through different arrangements that are referred to as agent-trustee structures outside the US.鈥�
Five years in the making, the EATM has been created by FIA in collaboration with Bank of America, Barclays, Citi, Goldman Sachs, and J.P. Morgan, as well as LCH, Eurex Clearing, and Linklaters.
It was initially designed for use with OTC derivatives, but could be extended to exchange traded contracts, subject to demand.
The EATM has been developed under English law, with an equivalent structure currently being developed under German law.
Under the EATM (English law), clearing members may enter trades with a CCP on behalf of their clients and hold those trades on trust for those clients.
This, says the FIA, differs from Europe鈥檚 predominant 鈥榩rincipal model鈥� in which clearing members act as financial intermediaries between their clients and the CCP.鈥�
This means that under the EATM, a clearing member is party to one transaction 鈥� the client transaction with the CCP, whereas under the principal model, it is party to two transactions 鈥� one with the CCP and one with the client.
The aim of the EATM is to bolster capacity, particularly among G-SIB clearing members, which face additional capital charges when they clear OTC derivatives for their clients under the principal model.
Walt Lukken, FIA president and CEO, says: 鈥淏y effectively removing the double-counting, the EATM will help increase the capacity of clearing members offering client clearing in Europe through cost savings and efficiencies.
鈥淭he EATM provides welcome capacity for clearing services at a time of unprecedented growth in our markets.鈥�
The launch by LCH鈥檚 SwapClear marks the go-live of the EATM (English law) model 鈥� this means that UK-based clearing members of SwapClear can offer the EATM to their clients, irrespective of their clients鈥� location.
Eurex Clearing is in the process of implementing the same model and will inform market participants once it has been completed. Both CCPs also intend to implement the EATM in due course for Germany-based clearing members.
While LCH and Eurex Clearing have been involved in the project from the start, the EATM is designed to be CCP-neutral and can be offered by any European CCP.
It has also been designed to ensure there is minimal disruption to existing CCP operations, processes and rules.
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