Eurex launches deliverable cross currency swaps and OTC FX clearing
26 July 2021 Germny
Image: stock.adobe.com/Sergio_Delle_Vedove
Central counterparty Eurex Clearing has gone live with its clearing service for deliverable cross currency swaps and OTC FX.
The transactions are cleared and settled on a net basis across cross currency swaps and OTC FX, significantly reducing capital requirements under SA-CCR, the standardised approach for measuring counterparty credit risk.
Eurex Clearing guarantees settlement in CLSClearedFX, which provides liquidity and funding benefits and mitigating settlement risk.
CLS is the leading provider of settlement services for the global foreign exchange market.
German bank Commerzbank joined J.P. Morgan and Morgan Stanley as clearing members to enable the completion of testing and go-live of the service, following a successful test phase.
For Eurex and its parent company, Deutsche B枚rse, the launch cements the group鈥檚 ambition to support a wider move from OTC to central clearing.
Eurex Clearing CEO Erik M眉ller says: 鈥淐entral clearing and guaranteed settlement for cross currency swaps in CLSClearedFX is a world first. We are pleased to have launched this together with CLS to deliver capital, liquidity and settlement benefits 鈥� providing further resilience to the market.鈥�
CLS global head of product Keith Tippell says: 鈥淭he addition of Eurex Clearing to CLSClearedFX, our settlement service for cleared FX and derivatives, demonstrates the benefits we can deliver to market participants by collaborating with other market infrastructures to further mitigate systemic risk.鈥�
OTC FX clearing includes FX Spot, FX Forward and FX Swap matched on 360T, Deutsche B枚rse鈥檚 global FX unit. The launch of non-deliverable forwards (NDF) clearing is scheduled for the second half of 2021. Eurex Clearing will then be offering clearing services for both, deliverable and non-deliverable FX products. This will provide further capital and operational efficiencies to clearing members, leveraging the same connectivity for both product groups.
Commerzbank divisional head of the interest rates, currencies and commodities trading Jochen Litzinger adds: 鈥淓urex Clearing has addressed significant complexity in implementing clearing and guaranteed settlement of these products, providing capital savings and operational efficiencies. It has been an important project on our side to innovate in the FX market, where we received significant support from Sernova Financial to structure our clearing workflows across different central clearing parties in the most efficient way. We are delighted to be part of this service.鈥�
J.P. Morgan head of rates, fixed income financing and credit portfolio trading Charles Bristow comments: 鈥淐ross currency swaps play an important role in the flow of capital through the international markets. Moving to a centrally cleared model is a significant moment for the asset class as it reduces complexity, enhances efficiency and increases market resilience.鈥�
Morgan Stanley COO for macro products Marco Gregotti says: 鈥淲e support the growth of post-trade services for currency swaps and FX markets and are pleased to be part of the Eurex Offering.鈥�
The transactions are cleared and settled on a net basis across cross currency swaps and OTC FX, significantly reducing capital requirements under SA-CCR, the standardised approach for measuring counterparty credit risk.
Eurex Clearing guarantees settlement in CLSClearedFX, which provides liquidity and funding benefits and mitigating settlement risk.
CLS is the leading provider of settlement services for the global foreign exchange market.
German bank Commerzbank joined J.P. Morgan and Morgan Stanley as clearing members to enable the completion of testing and go-live of the service, following a successful test phase.
For Eurex and its parent company, Deutsche B枚rse, the launch cements the group鈥檚 ambition to support a wider move from OTC to central clearing.
Eurex Clearing CEO Erik M眉ller says: 鈥淐entral clearing and guaranteed settlement for cross currency swaps in CLSClearedFX is a world first. We are pleased to have launched this together with CLS to deliver capital, liquidity and settlement benefits 鈥� providing further resilience to the market.鈥�
CLS global head of product Keith Tippell says: 鈥淭he addition of Eurex Clearing to CLSClearedFX, our settlement service for cleared FX and derivatives, demonstrates the benefits we can deliver to market participants by collaborating with other market infrastructures to further mitigate systemic risk.鈥�
OTC FX clearing includes FX Spot, FX Forward and FX Swap matched on 360T, Deutsche B枚rse鈥檚 global FX unit. The launch of non-deliverable forwards (NDF) clearing is scheduled for the second half of 2021. Eurex Clearing will then be offering clearing services for both, deliverable and non-deliverable FX products. This will provide further capital and operational efficiencies to clearing members, leveraging the same connectivity for both product groups.
Commerzbank divisional head of the interest rates, currencies and commodities trading Jochen Litzinger adds: 鈥淓urex Clearing has addressed significant complexity in implementing clearing and guaranteed settlement of these products, providing capital savings and operational efficiencies. It has been an important project on our side to innovate in the FX market, where we received significant support from Sernova Financial to structure our clearing workflows across different central clearing parties in the most efficient way. We are delighted to be part of this service.鈥�
J.P. Morgan head of rates, fixed income financing and credit portfolio trading Charles Bristow comments: 鈥淐ross currency swaps play an important role in the flow of capital through the international markets. Moving to a centrally cleared model is a significant moment for the asset class as it reduces complexity, enhances efficiency and increases market resilience.鈥�
Morgan Stanley COO for macro products Marco Gregotti says: 鈥淲e support the growth of post-trade services for currency swaps and FX markets and are pleased to be part of the Eurex Offering.鈥�
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