Eurex Clearing expands incentives to switch OTC swap portfolios into the EU
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Eurex Clearing expands incentives to switch OTC swap portfolios into the EU 03 November 2020Frankfurt Reporter: Natalie Turner
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Eurex Clearing, the Deutsche Boerse-owned central counterparty (CCP), has sweetened the terms of its switch incentive programme and extended the deadline by three months until June 2021.
The programme is designed to support and encourage clearing members to transfer existing over-the-counter (OTC) interest rate swap and overnight index swap portfolios at other CCPs to Eurex Clearing.
As part of the incentives, Eurex offers a complete waiver of booking fees for OTC interest rate swaps and overnight index swaps for banks and institutional investors for portfolios transferred to Eurex Clearing.
In order to further entice clearing members, Eurex is now also offering a “substantial fee rebate voucher” on future transactions in OTC interest rate derivatives. This new voucher rebate model will be applicable until June 2022.
A statement by Eurex reveals: “By switching a swaps portfolio of €250 billion, a clearing member would realize an economic benefit of up to €1.5 million.”
Eurex Clearing has also renewed its discounts on its gold fee packages giving clearing members a discount of 33 percent, equating to a €3 million saving over this three-year period.
Matthias Graulich, member of the Eurex Clearing executive board, comments: “With the expansion of our CCP switch incentive programme, we want to make it easier for market participants to comply with the demands of the regulators and transfer swap business into the EU.
“With our offering to clear OTC interest rate swaps within the EU, we are contributing to a more resilient and competitive clearing ecosystem.”
Following the launch of the programme, Eurex Clearing has established a EU 27-based alternative liquidity pool for OTC interest rate derivatives. More than 500 banks and buy-side firms have been on-boarded for swaps clearing.
According to Eurex Clearing, the market share in euro-denominated OTC interest rate derivatives in terms of outstanding volume has been continuously growing and currently stands at around 19 percent.
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Image: rh2010 / Adobestock.com 