Eurex repo clearing reaches 24 participants in Brexit shift

The extension of Eurex’s Partnership Program to the repo segment has so far signed up 24 participants from the US, the UK and Continental Europe. The program’s aim is to grow the cleared repo business for pension funds and asset managers, as well as for repo transactions in the interbank market for European government bonds at Eurex. Among the participants are Commerzbank, DekaBank, J.P. Morgan, Landesbank Baden-Württemberg and Citigroup. The design of the program extension to the repo segment builds on the Partnership Program in the OTC interest rate derivatives area.

So far, a significant part of the cleared European government bond repo business takes place in the UK. Shifting parts of this business to Eurex supports market participants in managing regulatory uncertainty and potential requirements post-Brexit. It allows institutions to benefit from TARGET2-Securities, the pan-European platform that allows for real-time settlement in central bank money. Most importantly, market participants benefit from lower balance sheet utilization as they can leverage Eurex’s unique netting features across Special, GC (General Collateral) and GC Pooling Repo transactions.

Peter Fejfer Nielsen, head of EMEA Finance Desk, Citigroup said in a statement: “As a design partner of the Eurex Partnership Program, we highly appreciate the inclusion of repo as it offers us an additional alternative to clear our EUR-denominated Repos.”

Inga Johal, head of Group Treasury, Commerzbank, said in a statement: “Continued high demand for HQLA collateral combined with a concentration of settlement in Europe requires strong sources of market liquidity. The linkage between custody, triparty, CCP and electronic trading are key to achieve this high degree of market efficiency. Commerzbank as a key driver of digital innovation joint the Eurex Partnership Program Repo in order to ensure operational readiness towards the next level of Liquidity/HQLA management.”

Michael Cyrus, head of Collateral Trading and FX, DekaBank, said in a statement: “As one of the leading Repo and Securities Lending houses in Germany, we welcome Eurex’s Partnership Program to offer an alternative solution for trading and clearing of our EUR-denominated Repos within the EU27.”

Nicola Danese, head of EMEA FI Financing, J.P. Morgan, said in a statement: “The new enhancements to Eurex Repo aim to increase the balance sheet netting opportunities and optimize margin requirements for Clearing Members. As one of the first members of the Eurex Clearing Partnership Program, we welcome this initiative and the exciting development for the industry.”

Lars Stridde, head of Securities Financing, Landesbank Baden-Württemberg (LBBW), said in a statement: “With this initiative, Eurex Repo together with Eurex Clearing offers us an alternative for clearing European government bonds and in particular Bund-Repos via Eurex Clearing. Furthermore, it helps to manage our balance sheet with more netting opportunities.”

Read the full release

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