Eurex launches swaps and OTC FX clearing service

JP Morgan, Morgan Stanley and Commerzbank have gone live as the first clearing members on the service at Eurex.

Eurex has launched clearing for deliverable cross-currency swaps and over the counter (OTC) FX products following a test phase.

JP Morgan, Morgan Stanley and Commerzbank are the first clearing members to go live on the service, which Eurex said makes it the first clearinghouse to physically settle cleared cross-currency swaps via CLS’s settlement service, CLSClearedFX.

The clearing service uses a net basis across cross currency swaps and OTC FX to clear and settle transactions, reducing capital requirements under the standardised approach for measuring counterparty credit risk (SA-CCR) regulation.

It offers clearing across FX spot, forward and FX swap matched on Deutsche Börse’s global FX unit, 360T. Clearing of non-deliverable forwards (NDF) is scheduled to be launched in the second half of this year expanding Eurex’s clearing services to include both deliverable and non-deliverable FX products.

Eurex claimed that this will provide further capital and operational efficiencies to clearing members, leveraging the same connectivity for both product groups.

“Cross currency swaps play an important role in the flow of capital through the international markets,” said Charles Bristow, head of rates, fixed income financing and credit portfolio trading at JP Morgan. “Moving to a centrally cleared model is a significant moment for the asset class as it reduces complexity, enhances efficiency and increases market resilience.”

The launch follows news earlier this month that Eurex had expanded the buy-side access to its cleared repo business, giving hedge funds and other firms access to the scheme.

“The 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,” said Keith Tippell, global head of product at CLS.