Eurex sees strong interest in repo extension of partnership programme
07 December 2018 Frankfurt
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Eurex Clearing has seen a “strong interest” in the repo extension of its partnership programme with 24 participants registering from the US, UK and continental Europe.
The programme aims to grow repo transactions in the interbank market for European government bonds at Eurex.
The extension repo segment builds on the partnership programme in the over-the-counter interest rate derivatives area.
According to Eurex, a significant part of the cleared European government bond repo business takes place in the UK.
It suggested that shifting parts of this business to Eurex supports market participants in managing regulatory uncertainty and potential requirements post-Brexit.
Eurex explained that it allows institutions to benefit from TARGET2-Securities, as well as seeing market participants benefit from lower balance sheet utilisation.
Matthias Graulich, member of the Eurex Clearing executive board, commented: “We do all we can to support our customers to ensure a smooth transition to a post-Brexit world. Therefore, we are very pleased that the extension of our partnership programme to the repo segment meets the market needs and we thank all our design partners.”
As a registered member of the programme, Inga Johal, head of group treasury, Commerzbank, said: “Continued high demand for high-quality liquid assets (HQLA) collateral combined with a concentration of settlement in Europe requires strong sources of market liquidity. The linkage between custody, triparty, central counterparty and electronic trading are key to achieve this high degree of market efficiency. Commerzbank as a key driver of digital innovation joint the [partnership programme] in order to ensure operational readiness towards the next level of liquidity/HQLA management."
Another partner, Nicola Danese, head of Europe, the Middle East and Africa FI financing, J.P. Morgan, added: “The new enhancements to Eurex Repo aim to increase the balance sheet netting opportunities and optimise margin requirements for clearing members. As one of the first members of the [the partnership programme], we welcome this initiative and the exciting development of the industry.”
The programme aims to grow repo transactions in the interbank market for European government bonds at Eurex.
The extension repo segment builds on the partnership programme in the over-the-counter interest rate derivatives area.
According to Eurex, a significant part of the cleared European government bond repo business takes place in the UK.
It suggested that shifting parts of this business to Eurex supports market participants in managing regulatory uncertainty and potential requirements post-Brexit.
Eurex explained that it allows institutions to benefit from TARGET2-Securities, as well as seeing market participants benefit from lower balance sheet utilisation.
Matthias Graulich, member of the Eurex Clearing executive board, commented: “We do all we can to support our customers to ensure a smooth transition to a post-Brexit world. Therefore, we are very pleased that the extension of our partnership programme to the repo segment meets the market needs and we thank all our design partners.”
As a registered member of the programme, Inga Johal, head of group treasury, Commerzbank, said: “Continued high demand for high-quality liquid assets (HQLA) collateral combined with a concentration of settlement in Europe requires strong sources of market liquidity. The linkage between custody, triparty, central counterparty and electronic trading are key to achieve this high degree of market efficiency. Commerzbank as a key driver of digital innovation joint the [partnership programme] in order to ensure operational readiness towards the next level of liquidity/HQLA management."
Another partner, Nicola Danese, head of Europe, the Middle East and Africa FI financing, J.P. Morgan, added: “The new enhancements to Eurex Repo aim to increase the balance sheet netting opportunities and optimise margin requirements for clearing members. As one of the first members of the [the partnership programme], we welcome this initiative and the exciting development of the industry.”
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