The battle for dominance in clearing interest rate swaps in Europe heated up yesterday with the news that Eurex’s new platform EurexOTC Clear will be rolled out in the second half of the year. William Mitting looks at the challenge and opportunity for Eurex.
Eurex’s launch is notable for two reasons: its
intention to target the client clearing side and the cross
margining of OTC interest rate products against its portfolio
of exchange traded interest rate contracts.
The G20 mandate to clear OTC derivatives through CCPs was
set for the beginning of next year. While the details of the
mandate are still being thrashed out by regulators across the
globe and only certain instruments will ready for the deadline,
the race for dominance is most certainly on.
Interest rate swaps, by far the largest of the OTC markets,
is unsurprisingly one of the key early battle grounds and lie
at the heart of Eurex’s launch (it is also
proposing to clear OTC equity derivatives). In Europe,
LCH.Clearnet has a dominant position in the dealer-to-dealer
IRS market having launched SwapClear in 1999.
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