Let customers choose where to clear euro derivatives, banks tell EU

Let customers choose where to clear euro derivatives, banks tell EU thumbnail - Financial Markets Worldwide

Please try another search

Economy25 minutes ago (May 19, 2021 07: 52AM ET)

Let customers choose where to clear euro derivatives, banks tell EU© Reuters.

By Huw Jones

LONDON (Reuters) – It should be for clients to decide where they clear euro derivatives, though customers are ready to move business from London to Frankfurt if forced to by the European Union, bankers said on Wednesday.

The London Stock Exchange’s LCH unit clears more than 90% of euro-denominated interest rates swaps, a market that helps companies guard against unexpected moves in borrowing costs.

Permission for LCH to clear for customers in the bloc ends in June 2022 and Brussels wants euro business moved to Deutsche Boerse (DE:)’s Eurex in Frankfurt to avoid relying on London.

EU officials are discussing with banks what steps are needed to engineer a shift, but face concerns that splitting clearing would bump up costs.

“The client decides where they want to trade and where they want to clear,” Robbert Booij, CEO for ABM AMRO clearing bank in Europe, told a Futures Industry Association event. “I am not so concerned about clients moving business, I am concerned about access being cut off.”

Sabrina Wilson, a managing director at Citi, said clients were ready to clear in London and Frankfurt, but managing risk from two different books can be costly and tricky.

Britain fully left the EU on Dec. 31, 2020. Swathes of trading in euro swaps have since left for the EU and New York, but clearing has so far stayed.

“The bottom line is we haven’t seen a change in market behaviour,” Julien Jardelot, head of Europe government relations at London Stock Exchange. “EU firms need access to the rest of the world if they are to remain competitive both in euro and also in other currencies.”

Eurex said the shift in clearing was a slow process.

“Progress is definitely happening on that space, whether it’s fast enough to keep the EU authorities happy I’m not too sure,” said Philip Simons, Eurex’s global head of fixed income sales. “The market wants to see split liquidity pools because that is competition and choice.”

Related Articles

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Read More

Learn More: business analyst salary, business synonym, business administration jobs, business near me, business hours, business development manager salary, my business course, business in spanish, business headshots, business first, business unit, business brokers near me, dbusiness, 2 business days, is business administration a good major, business horizons, 7 business days, business knowledge, business use case.

Leave a Reply

Your email address will not be published. Required fields are marked *