ICE to clear Euro rates futures in Europe to mitigate regulatory impact

The US group, which operates the main, London-based Euro short-term interest rate futures market, said it has applied to the Dutch central bank for permission to start clearing Euro-denominated short-term interest rate futures and options in Amsterdam.

ICE, which runs exchanges and clearing houses in the UK and Europe, plans to start clearing the interest rate products through ICE Clear Netherlands, a European-regulated clearing house that currently clears a few equity derivatives.

Chris Rhodes, president of ICE Futures Europe told FOW: "We are working on a solution to help clients meet their active account requirements for European Short Term Interest Rate futures via ICE Futures Europe block trade facility and cleared at ICE Clear Netherlands. We are working to gain the necessary regulatory clearances to offer this service."

The European active account requirement (AAR), which takes effect on Tuesday June 24, requires European trading firms to open and use accounts with European-based clearing houses like Frankfurt’s Eurex Clearing.

The AAR is an attempt to force European firms to reduce their reliance on London-based clearing houses like ICE Clear Europe and LCH, which since Brexit in 2021 are outside European regulatory authority.

London-based ICE Futures Europe is home to the Euribor futures complex, Europe’s largest listed derivatives market by far. That exchange traded in the first five months of this year 190 million lots of three-month Euribor futures, which was up 31% on the same period last year, according to the firm.

Eurex, which relaunched its Euribor contracts in late 2023 to capitalise on the AAR, traded in the first five months of this year 12 million lots, according to FOW Data.

Speaking at a conference in London, a senior executive at Deutsche Bank backed this week calls for a delay to the enforcement of the AAR because the technical standards have not yet been published despite the requirement taking effect on Tuesday.