What is an Omnibus account and how does it work?


Omnibus accounts, set up by clearing firms for non-clearing firms, are used to funnel orders from individual accounts at a non-clearing firm into one omnibus account at the clearing firm. All orders placed for a particular exchange from those individual accounts are sent to the clearing firm and exchange using the omnibus account.

In this way, customers of the non-clearing firm are not disclosed to the clearing firm.

Non-clearing firms are able to manage risk separately from the omnibus account and can have multiple
omnibus accounts with a range of clearing firms.

A separate omnibus environment is created. The clearing FCM sets up the omnibus account, making sure to set the location and risk server for the omnibus route. The non-clearing FCM sets up the individual accounts. Traders associated with the non-clearing firm place orders using that firm’s account, and the orders are sent to the clearing firm and exchange using the omnibus account. 

For example:

Suppose that a non-clearing firm needs to clear Eurex through a specific clearing firm:
1. The clearing firm provides their Eurex ID to be used by the non-clearing firm to CQG.
2. CQG creates an Omnibus Eurex route.
3. In CAST (Customer Account Service Tool), the clearing firm creates an omnibus account for the non-clearing firm, sets the route for the account as Omnibus Eurex route, and then sets risk for the omnibus account. The total individual accounts at the non-clearing firm cannot place trades beyond the risk parameters set for the omnibus account.
4. In CAST, the non-clearing firm creates individual accounts and sets risk for those accounts.
5. When any of those non-clearing individual accounts trade on Eurex, trades from the non-clearing firm are submitted to the clearing firm and Eurex using the omnibus account. Because they all use the same route, they remain anonymous. 
6. CQG also offers the option of a virtual omnibus account that uses the non-clearing firm account number rather than the omnibus account number. You can take advantage of the omnibus functionality, using one account to manage risk for an entire group while sending individual accounts to the exchange.


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Comments

  • The first part is fine, I would change the example.

    Suppose that a non-clearing firm needs to clear Eurex through a specific clearing firm:

    1. The clearing firm setups a Eurex route with CQG if they haven't already.

    2. In CAST (Customer Account Service Tool), the clearing firm creates an omnibus account for the non-clearing firm, enables the Eurex route on the acct, and then sets risk for the omnibus account. The total individual accounts at the non-clearing firm cannot place trades beyond the risk parameters set for the omnibus account.

    3. CQG then enables the Eurex route for the non-clearing firm which gives them access in their CAST to that route. 

    4. In CAST, the non-clearing firm creates individual accounts, enables the Eurex route which is mapped to the omnibus account and sets risk.    

    5. When any of those non-clearing individual accounts trade on Eurex, trades from the non-clearing firm are submitted to the clearing firm and Eurex using the omnibus account. Because they all use the same route, they remain anonymous.

    6. CQG also offers the option of a virtual omnibus account that uses the non-clearing firm account number rather than the omnibus account number. You can take advantage of the omnibus functionality, using one account to manage risk for an entire group while sending individual accounts to the exchange.
  • looks good
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