The Frankfurt-based exchange’s Eurex Clearing said it will expand its “partnership” program to include repurchase or repo agreements and foreign exchange traded among banks from the first quarter of 2019.
The more volume that users pass through Eurex, the bigger share of profit they will get. It is similar to a long-standing program at the LSE’s LCH unit, which dominates euro-denominated clearing in Europe.
Financial centers such as Frankfurt and Paris are vying to win a share of London’s financial market, Europe’s biggest, as UK-based financial firms shift some business to new EU hubs ahead of Brexit.
The aim of the repo program is to increase choice and efficiency for market participants in special repo and general collateral instruments, and to grow in the dealer-to-client repo business, Eurex said.
LCH’s Paris subsidiary clears repo-related business.
Some EU policymakers want euro-denominated clearing moved from London to the euro zone after Brexit.
In the event of a no-deal Brexit, London would likely remain a clearing center for EU customers to give rivals like Eurex time to build up capacity, an EU document indicated on Wednesday.
Eurex launched its program a year ago to capture a chunk of LCH’s euro interest rate swaps business, though it is still dwarfed by its London counterpart.
The OTC FX market is still largely uncleared, Eurex said.
“Eurex Clearing is currently working with market participants to be the first major clearinghouse to offer a comprehensive cross-currency swap clearing service,” it said in a statement.
Commerzbank, Deutsche Bank, JP Morgan and Morgan Stanley have expressed an early interest to join both new segments, Eurex said, adding that Citigroup, DekaBank and LBBW may participate in the repo program.
Reporting by Huw Jones; Editing by David Holmes