First buy-side client inflation swap trades cleared at Eurex
13 November 2020 UK
Image: peshkova/adobe.stock.com
Aegon Asset Management has become the first buy-side client to clear zero coupon inflation swap (ZCIS) transactions at Eurex Clearing, with J.P. Morgan acted as executing and clearing broker.
The Deutsche Boerse-owned central counterparty (CCP) offers ZCIS clearing for the eurozone Harmonized Index of Consumer Prices excl. Tobacco, the French Consumer Price Index, and the UK Retail Price Index.
Eurex says it has seen regular dealer-to-dealer volumes since the first inflation swap transactions which were cleared in June with initial trades submitted by BNP Paribas, UniCredit and Societe Generale.
Inflation swaps are used to transfer the risk of inflation from one party to another through an exchange of cash flows.
While one party pays a fixed rate cash flow on a notional principal amount, the other party pays a floating rate linked to an inflation index. These contracts are most commonly linked to consumer price indexes.
Besides risk efficiencies, clients benefit from operational savings by reducing fragmentation within a single currency and bundling central clearing across multiple asset classes, says Eurex.
Danny Chart, Eurex鈥檚 head of over-the-counter product and clearing business development, says: 鈥淲e have seen regular dealer activity each month since the first trades back in June. It鈥檚 great to build on this momentum and show that there is real end-client demand for the clearing of these instruments at Eurex.
鈥淏uilding up liquidity in these products will be a gradual process, and we will work closely with both buy- and sell-side participants to manage this development.鈥�
Derek Milner, senior portfolio manager derivatives and hedging at Aegon, adds: 鈥淔rom our perspective, being able to clear a greater range of products at Eurex is an important step forward and will offer real benefits for end-clients such as ourselves. We鈥檙e very happy to clear these first trades at Eurex and we will look to further develop exposures over the near to mid-term.鈥�
Tom Prickett, co-head of Europe, the Middle East and Africa rates at J.P. Morgan, concludes: 鈥淎cting as an executing broker on trades such as these gives us the opportunity to provide additional liquidity and choice for our clients.鈥�
The Deutsche Boerse-owned central counterparty (CCP) offers ZCIS clearing for the eurozone Harmonized Index of Consumer Prices excl. Tobacco, the French Consumer Price Index, and the UK Retail Price Index.
Eurex says it has seen regular dealer-to-dealer volumes since the first inflation swap transactions which were cleared in June with initial trades submitted by BNP Paribas, UniCredit and Societe Generale.
Inflation swaps are used to transfer the risk of inflation from one party to another through an exchange of cash flows.
While one party pays a fixed rate cash flow on a notional principal amount, the other party pays a floating rate linked to an inflation index. These contracts are most commonly linked to consumer price indexes.
Besides risk efficiencies, clients benefit from operational savings by reducing fragmentation within a single currency and bundling central clearing across multiple asset classes, says Eurex.
Danny Chart, Eurex鈥檚 head of over-the-counter product and clearing business development, says: 鈥淲e have seen regular dealer activity each month since the first trades back in June. It鈥檚 great to build on this momentum and show that there is real end-client demand for the clearing of these instruments at Eurex.
鈥淏uilding up liquidity in these products will be a gradual process, and we will work closely with both buy- and sell-side participants to manage this development.鈥�
Derek Milner, senior portfolio manager derivatives and hedging at Aegon, adds: 鈥淔rom our perspective, being able to clear a greater range of products at Eurex is an important step forward and will offer real benefits for end-clients such as ourselves. We鈥檙e very happy to clear these first trades at Eurex and we will look to further develop exposures over the near to mid-term.鈥�
Tom Prickett, co-head of Europe, the Middle East and Africa rates at J.P. Morgan, concludes: 鈥淎cting as an executing broker on trades such as these gives us the opportunity to provide additional liquidity and choice for our clients.鈥�
Next derivatives article →
Goldman Sachs joins forces with AccessFintech to deliver new payments service
Goldman Sachs joins forces with AccessFintech to deliver new payments service
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
