* Clearing platform went live on Tuesday
* Analysts see platform boosting Boerse revenue mid-term
* Banks influenced fee structure, win discounts -source
By Luke Jeffs
LONDON, Nov 15 Sixteen of the world's top banks
are backing a new interest rate swap clearing service from
Deutsche Boerse in an early show of support for a move by the
German exchange to tap derivatives reform.
The Frankfurt-based exchange said on Thursday 10
banks including Barclays, Credit Suisse, JP
Morgan and the Royal Bank of Scotland began
using the service, called Eurex Clearing, after its launch on
The exchange said a further six banks, including Goldman
Sachs, Morgan Stanley and Societe Generale
, were set to use the service, while funds would be
able to join from the second half of 2013.
"The Eurex Clearing platform offers our clients additional
choice for clearing over-the-counter (OTC) products, which is
especially important given the introduction of mandatory
clearing requirements," said Alex Lenhart, European head of
prime services listed derivatives at Credit Suisse.
Interest rate swaps are complex derivatives that allow
companies to hedge their exposure to interest rate moves.
Deutsche Boerse is offering clearing for interest rate
derivatives now and plans to offer clearing in other asset
classes, such as equity swaps in the future.
Analysts said the clearing platform would help to boost
Deutsche Boerse's revenue at a time when traditional trading
activity has been dampened by market volatility and broader
"EurexOTC Clear will not contribute a very significant sum
to Deutsche Boerse's turnover next year but there absolutely is
potential in the medium term," said Equinet analyst Philipp
"And it's positive that Deutsche Boerse could win over 16
big banks. The more banks, the better," Haessler said.
A financial source said the banks backing the platform were
able to influence the fee structure during the preparation
phase and would also receive a discount under certain
Deutsche Boerse declined to comment on agreements with the
Deutsche Boerse has timed the launch to coincide with
planned reforms in the United States and Europe that will
overhaul the vast OTC derivatives market, including interest
rate swap trading.
Global regulators want to force swathes of the OTC markets
to start using clearing houses to make these complex products
easier to monitor and regulate.
Clearing houses sit between banks and other trading firms,
back-stopping their trades by holding capital that can be used
to bail out any firm left out of pocket by the collapse of a
trading partner, like that of Lehman Brothers four years ago.
"The new service, which will be further expanded in 2013, is
one important element of Eurex Clearing's comprehensive roadmap
in preparing for the changing regulatory environment," said
Deutsche Boerse in an emailed statement.
The Boerse and its rivals, including the CME Group,
the IntercontinentalExchange, the London Stock Exchange
and NYSE Euronext, are working to position
themselves ahead of the reforms that are set to take effect from
The Boerse's launch of interest rates clearing, the largest
group of derivatives traded off-exchange, pitches the German
exchange into direct competition with the main supplier of rates
The LSE group plans to buy a majority stake in LCH.Clearnet
before the end of this year in a deal that values the
Anglo-French provider that dominates rates clearing at about 800
The other banks using Eurex Clearing for rates are Basler
Kantonalbank, Citigroup, Deutsche Bank
, Commerzbank, HSBC and UBS
BNP Paribas, Nomura and Norddeutsche
Landesbank have also pledged to use the German rates
clearing service, the exchange said.
Investment banks are keen to support new clearing
initiatives to promote competition between providers which tends
to keep fees down and lowers the banks' costs.