Eurex derivatives volumes continue uptrend in September

abdelaziz Fathi

Deutsche Börse’s derivatives-focused exchange, Eurex today said its total traded derivatives contracts grew by 20 percent in September, from 179 million to 214 million compared to the same month last year.

Eurex’s profit sharing scheme continues to win clearing business from rivals in the UK even as the battle for euro-clearing continues. Since Britain fully left the EU in December, clearing euro derivatives has become a Brexit battle as Brussels seeks to build up the bloc’s own capital market and end reliance on London.

Interest rate derivatives were again the standout sector with 30 percent year-on-year growth, from 64.6 million traded contracts to 83.7 million. Index derivatives also increased by 29 percent, from 84.8 million traded contracts to 109.4 million. Collectively, total contracts traded in equity derivatives grew by 19 percent from 179.6 to 214.2 million.

Eurex disclosed that notional outstanding volumes in OTC clearing grew by 27 percent compared to September 2021. Overall outstanding volume stood at EUR 26,286 billion at the end of September vs. EUR 20,698 billion the year before – with interest rate swaps and overnight index swaps posting growth of 21 percent and 108 percent respectively. Average daily cleared volumes remain steady with interest rate swaps and overnight index swaps recording growth rates of 12 percent and 37 percent, respectively.

At Eurex Repo, average daily term-adjusted volume grew by 72 percent compared to September last year – up from EUR 139.9 billion to EUR 240.6 billion. The GC Pooling market was up 46 percent while the Repo Market grew by 83 percent year-on-year.

The Eurex FX offering of classic FX futures and options, in combination with the rolling spot futures, allows traders to manage their FX exposures with listed products.

The pan-European exchange has made efforts over the past year to expand its FX trading business, most recently signing major banks to support their FX futures, from clearing to trading.

Eurex’s currency trading desk currently offers various FX derivatives products, including FX futures available in 19 currency pairs, all with quotation and tick sizes in-line with existing OTC FX standards. A liquidity scheme caters for tight pricing and competitive liquidity, it says.

However, London remains the pre-eminent in FX and OTC derivatives, which are used by investors to hedge their portfolios, but market participants are concerned that the Brexit deal will cause disruption in the cross-border derivatives market.

UK clearinghouses must decide whether to shift derivatives trades worth billions of euros from Britain. For instance, LCH, the LSE-controlled clearing house that processes around 90 percent of euro-denominated derivatives, is now outside the bloc’s legal system. The LSE said its pan-European platform Turquoise would shift trading in shares of companies based in the bloc to its new Dutch hub if it loses access to the single market.

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