Eurex introduces incentive program to win clearing business from UK rivals

To support buy-side clients starting clearing OTC interest rate derivatives positions in the EU, Deutsche Börse’s derivatives-focused exchange,

This is a further step in support of the regulatory objectives to bring more Euro Clearing into the EU and in turn reduce reliance on CCPs outside the EU.

The new program is designed to incentivize clients running active accounts in the EU. Eurex’s profit sharing scheme continues to win clearing business from rivals in the UK even as the battle for euro-clearing continues. Since Britain fully left the EU in December, clearing euro derivatives has become a Brexit battle as Brussels seeks to build up the bloc’s own capital market and end reliance on London.

Matthias Graulich, Member of the Eurex Clearing Executive Board: “With this targeted incentive program for buyside clients, we again demonstrate our strong commitment for a market-led solution which is designed to further accelerate the development of a liquid, EU-based alternative for the clearing of OTC interest rate swaps. Especially against the backdrop of enduring uncertainty, changing rates and an increased need for hedging a broader marketplace through greater choice, improved price transparency, as well as reduced concentration risk is more important than ever.”

Eurex also disclosed that index derivatives continued their strong year-on-year growth, up 24 percent from 56.9 million traded contracts to 70.4 million. Interest rate derivatives increased by a further 2 percent compared with the high level of the previous year, from 52.2 million traded contracts to 53.2 million. Equity derivatives contracts fell by 31 percent in October, from 22.5 million to 15.6 million compared to the same month last year. Total contracts traded at Eurex grew by 6 percent from 131.8 to 139.4 million.

Meanwhile, notional outstanding volumes in OTC clearing grew by 38 percent compared to October 2021. Overall outstanding volume stood at EUR 28,379 billion at the end of October vs. EUR 20,499 billion the year before – with interest rate swaps and overnight index swaps posting growth of 21 percent and 99 percent respectively. Average daily cleared volumes more than tripled, with interest rate swaps and overnight index swaps recording growth rates of 22 percent and 10 percent, respectively.

At Eurex Repo, average daily term-adjusted volume grew by 32 percent compared to October last year – up from EUR 192.6 billion to EUR 253.3 billion. The GC Pooling market was up 22 percent while the Repo Market grew by 36 percent year-on-year.