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17 December 2018

Bloomberg: Deutsche Bank, Commerzbank test Frankfurt swaps move

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Deutsche Bank AG and 16 other lenders recently tested moving interest-rate swap positions from London to Frankfurt, according to people familiar with the matter, a signal that financial firms are pushing ahead with preparations for a no-deal Brexit.

The banks made dummy trades on Dec. 3 in the first known dry run of a service that could move trillions of dollars of derivatives from LCH Ltd. in London to Eurex Clearing in Frankfurt, the people said, asking not to be identified because the trial wasn’t made public. Capitalab, a subsidiary of interdealer broker BGC Partners Inc., oversaw the dry run.

If the U.K. leaves the European Union without an exit agreement and the banks have to use the service, the lenders’ existing positions at London’s LCH would be closed, with identical new positions opened at Eurex Clearing in Germany’s financial capital.

BGC and LCH declined to comment, as did Deutsche Bank and Commerzbank AG, which also took part. A Danske Bank A/S spokeswoman confirmed the lender participated in the test as part of its Brexit planning. [...]

Full article on Bloomberg

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