Eurex OTC FX Clearing Clears First Cross Currency Swap Transactions

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

otc fx

Eurex Clears First Cross Currency Swap Transactions

October 25, 2019

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The leading CCP and part of Deutsche Börse Group has cleared the first cross-currency swap transactions, which were submitted by J.P. Morgan and Morgan Stanley as the first OTC FX clearing participants.

The Eurex Clearing’s OTC FX clearing service currently offers interdealer clearing of EUR/USD and GBP/USD cross-currency swaps of up to 50 years’ maturity. Eurex Clearing also clears deliverable FX spots, FX forwards and FX swaps of up to two years which are executed at 360T.

Cross-currency swaps are an important component of Deutsche Börse’s FX strategy, consisting of the FX offerings of Eurex, Eurex Clearing and 360T. The company plans to extend the service in 2020 by launching client clearing, which enables clients of Eurex and 360T to benefit from portfolio effects and operational efficiencies achieved when using a single clearinghouse across multiple exchange-traded and OTC FX products.

Charles Bristow, Head of Rates, Fixed Income Financing and Credit Portfolio Trading, J.P. Morgan, stated:

“Cross-currency swaps play an important role in the flow of capital through international markets. Moving to a centrally cleared model is a significant moment for the asset class as it reduces the complexity linked to large bilateral counterparty exposures, enhances resource efficiency, and increases overall marketplace resilience.”

Andrew Millward, Head of Rates and FXEM for EMEA, Morgan Stanley, commented: “We appreciate the benefits that post-trade novation of risk can bring in terms of credit and risk optimization. We are therefore happy to lead the way for cross-currency and FX markets by using the Eurex FX clearing service.”

Erik Müller, Chief Executive Officer of Eurex Clearing, said: “With the successful completion of these first transactions, we have taken an important step in delivering greater efficiencies to the FX
market. Clients will benefit from significant capital relief and cost savings when centrally clearing their OTC FX exposures. Our objective is to build a cleared FX liquidity pool over time, as further clients decide to utilize our new FX clearing services.”

Carlo Kölzer, Head of FX Deutsche Börse Group and 360T CEO, added: “Regulatory changes such as Uncleared Margin Rules pose a burden to our clients and OTC FX clearing helps them to cope with these challenges. The OTC FX clearing capabilities of Eurex Clearing are therefore the logical complement to the Group’s FX OTC offerings via 360TGTX and the listed FX futures at Eurex.”

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