Eurex launches “unique service” for cross-currency swaps and OTC FX

Rick Steves

Clearing and settling on a net basis across cross-currency swaps and OTC FX significantly reduces capital requirements under SA-CCR, the standardized approach for measuring counterparty credit risk.

Eurex has launched a “unique service” for cross-currency swaps and OTC FX that offers netted settlement guaranteed by Eurex Clearing.

Commerzbank, J.P. Morgan, and Morgan Stanley have gone live with the clearing service for deliverable cross-currency swaps and OTC FX.

The launch underscores Deutsche Börse Group’s ambition to support the move from OTC to central clearing. Eurex is the first clearing house to physically settle cleared cross-currency swaps in CLSClearedFX, CLS’s settlement service for cleared FX products.

CLS announces post-trade platform for Financial Market Infrastructures

Clearing and settling on a net basis across cross-currency swaps and OTC FX significantly reduces capital requirements under SA-CCR, the standardized approach for measuring counterparty credit risk.

CLSClearedFX provides liquidity and funding benefits while mitigating settlement risk. Eurex Clearing guarantees settlement in the service.

Erik Müller, Chief Executive Officer at Eurex Clearing, said: “Central clearing and guaranteed settlement for cross-currency swaps in CLSClearedFX is a world first. We are pleased to have launched this together with CLS to deliver capital, liquidity and settlement benefits – providing further resilience to the market.”

Keith Tippell, Global Head of Product at CLS, commented: “The addition of Eurex Clearing to CLSClearedFX, our settlement service for cleared FX and derivatives, demonstrates the benefits we can deliver to market participants by collaborating with other market infrastructures to further mitigate systemic risk.”

Jochen Litzinger, Divisional Head of the Interest Rates, Currencies and Commodities Trading (IRCCT) Cluster at Commerzbank AG, added: “Eurex Clearing has addressed significant complexity in implementing clearing and guaranteed settlement of these products, providing capital savings and operational efficiencies. It has been an important project on our side to innovate in the FX market, where we received significant support from Sernova Financial to structure our clearing workflows across different central clearing parties in the most efficient way. We are delighted to be part of this service.”

Charles Bristow, Head of Rates, Fixed Income Financing and Credit Portfolio Trading at J.P. Morgan, noted: “Cross-currency swaps play an important role in the flow of capital through the international markets. Moving to a centrally cleared model is a significant moment for the asset class as it reduces complexity, enhances efficiency and increases market resilience.”

Marco Gregotti, COO for Macro Products at Morgan Stanley, said: “We support the growth of post trade services for currency swaps and FX markets and are pleased to be part of the Eurex offering.”

Eurex offers OTC FX clearing in FX Spot, FX Forward and FX Swap, which is matched on 360T, Deutsche Börse’s global FX unit. The launch of non-deliverable forwards (NDF) clearing is scheduled for the second half of 2021.

Later this year, Eurex Clearing will offer clearing for both deliverable and non-deliverable FX products, thus providing further capital and operational efficiencies to Clearing Members.

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