[...] Barclays, Citadel Securities, UBS, HSBC and ABN Amro are among the institutions joining the Frankfurt-based exchange and its scheme to share the profits from clearing with its users. An incentive programme expires later on Monday.
The clearing of euro-denominated swaps has become highly contested since Britain voted to leave the EU last year amid calls for it to be moved to the eurozone. A clearing house sits between two parties in a trade and manages the risk to the market if one side defaults on payment.
Deutsche Börse chief appointed from UniCredit unit Deutsche Börse’s Eurex Clearing is trying to persuade banks worried about the uncertainty surrounding Brexit to forgo their preference for London-based LCH, which plays a dominant role in the daily plumbing of global financial markets.
LCH accounts for more than 90 per cent of the global clearing business for interest rate and foreign exchange swaps and has been hitherto unaffected by EU plans for tougher oversight.
Last week LCH set a new record for the notional amount cleared in one day, processing $7.7tn. Swaps denominated in euros and dollars were among its biggest deals. Deutsche Börse will share the profits with its 10 most active market participants. Bank of America Merrill Lynch, Citigroup, Commerzbank, Deutsche Bank, JPMorgan and Morgan Stanley have already backed the scheme, which begins at the start of 2018. [...]
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