Eurex Clearing secures Japanese license as foreign financial instruments clearing organization

Maria Nikolova

Japanese financial institutions can directly access Eurex for swap clearing and combine their listed and OTC euro yield curve business in one single place.

Eurex, a part of Deutsche Börse Group, is expanding the reach of its OTC clearing services to Japan. Japan’s Financial Services Agency (FSA) has granted Eurex Clearing a license as a “foreign financial instruments clearing organization”, enabling Eurex’s central counterparty to offer its clearing services not only in the European Union and the United States but also in Japan.

The service extension into one of the largest Fixed Income markets is driven by client demand and will support the strong momentum of Eurex Clearing’s EU-based liquidity pool for Euro Swaps.

Japanese financial institutions will be able to directly access Eurex for swap clearing and combine their listed and OTC euro yield curve business in one single place.

Eurex Clearing has developed a strong liquidity pool for clearing euro-denominated interest rate derivatives, mainly through its partnership program launched in early 2018. This initiative aims to further accelerate the development of a liquid, EU-based alternative for the clearing of OTC interest rate derivatives. It benefits clients and the broader market place through greater choice and competition, improved price transparency as well as reduced concentration risk. Total notional outstanding of over EUR 18 trillion (end of February) keeps Eurex’s overall market share at about 18%.

Eurex explains that getting access to the Japanese market marks a logical next step for Eurex Clearing to expand its liquidity pool, as Japanese institutions are very active in European fixed income futures on Eurex and have also significant exposure in the Euro swap market. In addition, Japan is one of the largest ETD and OTC derivatives markets globally.

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