The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Eurex joins the cross-currency swap clearing party

The international exchange’s clearing offering for EUR/USD and GBP/USD cross-currency swap transactions marks another modest step towards wider use of central clearing in FX.

euros_dollars_pounds_notes-780.png



Eurex Clearing recently cleared its long-awaited first cross-currency swap transaction.

The company only offers interdealer clearing of EUR/USD and GBP/USD cross-currency swaps, although it says it plans to introduce client clearing next year.

Cross-currency swap clearing is not a new development – Hong Kong Exchanges and Clearing (HKEX) subsidiary OTC Clear has been clearing USD-HKD swaps for more than 18 months.

However, as the product becomes more established, other clearing houses can be expected to follow suit.

In turn, the number of swaps covered will increase, especially if market participants perceive a notable credit or settlement risk to these transactions, which combine an FX product and an interest-rate product.

Jon-Vollemaere2017-160x186

Jon Vollemaere,
R5FX

R5FX CEO Jon Vollemaere notes that his platform has always used a central counterparty clearing (CCP) model because problems with bilateral credit are even more concentrated in emerging markets.

“Whether in places like China – where netting isn’t currently recognised – or India and Brazil, where risk amongst both resident and non-resident traders is reduced by using a CCP model, providing customers with the choice of either cleared or uncleared is the way the market is moving,” he says.




You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree