Eurex Clearing is one of Europe's leading central counterparties and is part of the Deutsche Börse Group. It clears a wide range of financial products, including derivatives and repo transactions, handling trillions of euros in collateral. You can find more information on the Eurex website: www.eurex.com.

As mentioned above, crucially, Eurex is a Qualifying Central Counterparty (QCCP).
This is a formal regulatory status granted by authorities (under regulations like EMIR in Europe) to CCPs that meet certain standards for risk management, governance, and operational resilience. For banks and financial institutions, this status is vital as it allows them to hold much less regulatory capital against their exposures to the CCP, making it a highly capital-efficient way to transact. This designation serves as a regulatory "seal of approval" for Eurex's robustness.

In simple terms, Eurex GC Pooling is a secure and efficient way to lend or borrow cash on a  short-term basis. It's a specific type of repurchase  agreement (repo) transacted through the Eurex platform. Functionally, it is a collateralised loan structured as  a sale and repurchase agreement. What this means is that a cash borrower sells high-quality securities (collateral) to a cash lender with a legally binding agreement to repurchase them at a pre-agreed, slightly higher price at a future date.

The key distinction of the Eurex platform compared with other secured FTF offerings or repo transactions generally is the fact that for all GC Pooling repo transactions, Eurex Clearing acts as a Central Counterparty (CCP), standing in the middle of the transaction and guaranteeing its performance for both parties. 

GC Pooling transactions are a type of secured funding where cash investors/providers provide cash financing to borrowers against pre-defined liquid baskets of eligible securities/collateral, facilitating efficient trading and risk management. TreasurySpring's incorporated cell, as a buy side participant, will be taking the position of a short-term lender for the duration of the trade.

To simplify, TreasurySpring will be putting cash (in the form of FTF subscription monies) into the Eurex system and becoming a temporary owner of securities as collateral. At the agreed conclusion of the trade the securities are returned/sold back to the counterparty. The mechanism that allows Eurex to become the "middle man" for every trade is a legal process called novation. This is the core of the CCP's function. Through this process, Eurex Clearing becomes the buyer to every seller and the seller to every buyer. From the point of novation, each party's credit exposure is solely to Eurex Clearing, not to their original trading counterparty.

If a borrower (counterparty) defaults:

• This is the scenario the system is specifically designed to handle. If a borrower fails to return the cash, Eurex steps in immediately.
  
• For the lender (being the IC in all of our transactions), Eurex manages the default by liquidating the collateral that the defaulted borrower had posted. Due to the haircuts, this collateral is worth more than the loan, so Eurex can sell it to recoup the funds.
  
• In the rare event that a defaulting clearing member has not posted sufficient collateral to cover their obligations, Eurex Clearing's robust default waterfall mechanism is designed to absorb these losses systematically. This layered approach ensures the stability of the clearing house and protects non-defaulting members and is known as the default waterfall, which would be triggered in such a scenario and this process is explained in further detail below.

If Eurex itself defaults:

• This is considered a remote risk. A default by a QCCP like Eurex would be a systemic event.
  
• However, the unlikely event of an insolvency of Eurex Clearing would trigger an automatic close out netting, whereby all open positions are cancelled and replaced by a single net amount payable by one party to the other.
  
• If the single net amount is payable by Eurex Clearing to TreasurySpring's IC, the collateral under the relevant transaction(s) will be released, and we can then liquidate the securities to recover the originally invested cash amount in the reverse repo transaction(s).
  
• In the event of any shortfall following liquidation of the collateral, the IC can claim the remaining amount from Eurex Clearing’s insolvency administrator. The IC's claim can be considered senior unsecured and with the same ranking as other Clearing Members of Eurex Clearing who faced a loss.

While Eurex GC Pooling is designed to be extremely low-risk, no financial product is entirely without risk. It's important to be aware of them:

CCP Failure risk: As discussed, this is the ultimate risk. While Eurex's QCCP status and default waterfall make this event highly improbable, it cannot be considered zero.

Collateral risk: In a sudden, severe market crisis, the value of even high-quality collateral could fall sharply and rapidly. The haircuts and daily margining are designed to protect against this, but a massive overnight price drop could theoretically erode that buffer.

Operational risk: The risk of loss resulting from inadequate or failed internal processes, people, and systems. Eurex, like any large financial infrastructure provider, is exposed to operational, cyber, and legal risks. These are however heavily mitigated through robust controls and regulatory oversight.

Liquidity in One+ is unconditional because it is fully maturity matched. Each One+ Fixed-Term Fund invests in a one-day transaction, with the money automatically returned upon maturity. There is no maturity transformation and no reliance on secondary market liquidity. In the event of a clearing member default, Eurex Clearing provides immediate settlement by automatically executing its Default Waterfall, eliminating the need for any investor claim. This structure ensures that liquidity is delivered both by design and through the protections of a central counterparty.