Partnership Program gains traction

Release date: 05 Jun 2018 | Eurex

Partnership Program gains traction

Eurex Clearing continues to receive broad market support for its Partnership Program. So far, 29 market participants from the U.S., the U.K., Asia and Continental Europe have joined the program to back the joint objective of building a liquid alternative to clear Euro-denominated OTC interest rate derivatives in the EU27.

In June 2018, average daily cleared volume in interest rate derivatives increased to EUR 67 billion from EUR 8 billion last June. Notional outstanding stood at EUR 7.2 trillion compared to EUR 1.5 trillion end of June 2017. This means that Eurex Clearing now holds a market share of roughly 8 percent1) in the global Euro-denominated interest rate derivatives market.

There is no evidence for the concern that a fragmentation of the existing liquidity pool would lead to significant cost increases in particular for EU27 buy-side firms. For almost all relevant tenors, 19 banks supply quotes on request via Tradeweb and/or Bloomberg, and eleven banks currently actively stream live prices on the platforms largely at the same bid/offer spread and size as LCH.

“Our initial objective was to build liquidity in the dealer to dealer segment and motivate banks to provide attractive pricing to end clients,” says Matthias Graulich, Member of the Eurex Clearing Board. “Based on the excellent price quality now available to the buy side we will put a strong focus on activating and on-boarding more buy-side clients in the coming months.”

The performance based program aims to build a balanced ecosystem where responsibilities and benefits are fully aligned between all participants in terms of economics and governance. Against this background, Eurex Clearing installed a Fixed Income and Currency (“FIC”) Board Advisory Committee for the purpose of consulting with and making recommendations to the executive board of Eurex Clearing with respect to the general FIC strategy as well as product and service expansions.

The Committee consists of ten members. They are nominated for a two-year term to the Committee based on their performance in the Eurex Clearing Partnership Program. In addition, the five most active participants of the Partnership Program are represented in Eurex Clearing’s supervisory board.

With nearly 200 million traded contracts, Eurex saw strong volumes also on the listed side.

1) Based on Notional Outstanding in Euro-denominated OTC Interest Rate Derivatives published on the websites of Eurex Clearing, LCH and CME (as of 30 June 2018)

additional information