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02 September 2018

Financial Times: Deutsche Börse cools post-Brexit euro clearing ambitions

Deutsche Börse chief executive Theo Weimer has toned down his previously bullish ambition to quickly win a large chunk of the clearing market for euro-denominated derivatives.

At a conference organised by Germany’s business daily Handelsblatt in Frankfurt, Mr Weimer said that the odds of increasing Deutsche Börse’s current market share of around 8 per cent were “50-50”. In February, he stated that his plan is to win a market share of 25 per cent by 2019. Deutsche Börse last autumn launched a new incentive scheme desinged to make Frankfurt-based euro clearing more attractive.

Since then, its market share has risen from close to zero to 8 per cent. On Thursday, Mr Weimer did not repeat the 25 per cent goal but said only that he aims for more than the current level.

Recommended FT Trading Room Deutsche Bank shifts half of euro clearing from London to Frankfurt So far, London’s LCH has been the undisputed leader for clearing euro-denominated interest rate swaps, processing up to €1tn of notional deals a day.

German finance minister Olaf Scholz on Thursday said that he expects that “large parts” of the euro clearing market will over time move from London to a EU-based clearing house, with Frankfurt being well-positioned to attract the bulk of the business but he added that this “surely won’t happen by decree”.

Mr Scholz argued at the Handelsblatt conference that the clearing of financial derivatives was so important for the overall economy that it would “not entirely unproblematic” to have it located outside of the EU’s jurisdiction. “It’s not just our job to make sure this is well-regulated, this must be backed up by a stabilising institution,” said Mr Scholz. It would be “not easy to imagine” to delegate this task to a government which isn’t a member of the EU. “This needs to work when things get hairy.”

Full article on Financial Times (subscription required)

© Financial Times

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