Eurex selected by BNY Mellon to clear its first repo trades in Europe

abdelaziz Fathi

Deutsche Börse’s derivatives-focused exchange, Eurex, has been chosen by BNY Mellon, the world’s largest custodian, to centrally clear repo transactions. The collaboration is a major milestone for Eurex’s cleared repo markets, and the first time a clearing house in Europe has offered this service.

Eurex’s repo markets are deep and liquid, which offers clients the ability to trade repos with over 160 registered participants, including commercial and central banks, government financing agencies, and supranational organizations. This allows market participants to efficiently raise or place cash against more than 13,000 domestic and international securities.

Central clearing of repo transactions reduces risk for both parties to the trade by ensuring that the transaction is completed even if one party defaults. This makes the repo market more efficient and attractive to participants.

BNY Mellon‘s decision to leverage Eurex for clearing repo transactions is a sign of confidence in the clearing house and its ability to provide a safe and reliable service. The development is also good news for the European repo market as a whole. It shows that there is a growing demand for centrally cleared repo transactions, and it is likely to attract more participants to the market in the future.

Commenting on this, Frank Gast, Member of the Management Board of Eurex Repo said: “The opportunities in the European repo market are huge and Eurex is excited to support BNY Mellon with our centrally cleared and innovative offerings. We welcome BNY Mellon as a Trading and Clearing Member of Eurex Repo and Eurex Clearing.”

CEO of BNY Mellon’s European bank Björn Storim, added: “We are pleased to become a trading and clearing member at Eurex. Access to Eurex enhances our overall liquidity management tool kit. The demand for European repo is continuously increasing and this important milestone supports us in expanding our business and risk management capabilities in Europe.”

Eurex has already reported record trading volumes in its cleared repo markets due to a combination of factors, including the current market environment, TLTRO repayments, and a further reduction of excess liquidity. 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.

The total traded repo volume on Eurex across all markets has doubled on a YTD basis compared to the same period in 2022. Average daily term-adjusted trading volume also peaked at EUR 340 billion this year, which is an increase of more than 70 percent compared to same period last year. Looking only at the buy side, total traded repo volume increased 265 percent year-on-year during the same period.

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