Eurex can immediately provide a global solution for trading and clearing of credit derivatives/ Eurex Clearing to bring its expertise and risk management to OTC derivatives markets
The world’s leading derivatives exchange and clearing house Eurex today said, it shares the European Commissioner McCreevy’s call for action to improve market infrastructure in trading and clearing of OTC derivatives, most importantly credit default swaps (CDS).
Eurex ceo Andreas Preuss said in Brussels: “We agree with Commissioner McCreevy’s view that standardized trading and central clearing services will strengthen market integrity and stability in the credit derivatives market. Eurex has an immediately available ‘ready-to-use’ solution for trading and clearing of CDS. We are open to create a consortium with the CDS users to share governance and control of the CDS services.”
Thomas Book, Eurex executive board member, who is responsible for clearing, added: “A central clearing service will improve risk management and capital efficiency and at the same time mitigate counterparty risk. Eurex Clearing as the largest European clearing house will bring its proven expertise and state-of-the-art risk management to the CDS market.”
Preuss and Book attended today a meeting in Brussels hosted by European Commissioner McCreevy to discuss how to best mitigate the risks from credit derivatives.
Eurex announced in early October its offer to build a consortium structure aiming to provide shared governance and control to the users. The solution consists of two stages: Eurex offers a “ready-to-use” solution for iTraxx® index contracts, as well as certain single name CDS products. CDX® contracts will be added, subject to signing a license arrangement with Markit. In the first half of 2009, this offering will be complemented by an OTC clearing solution for credit derivatives documented by the International Swaps and Derivatives Association (ISDA).
Eurex has already presented its solution to European authorities including the European System of Central Banks and received support. Deutsche Bundesbank also backs a European central clearing solution for OTC credit derivatives which will enhance the stability of European financial markets. On 10 October, Eurex Clearing presented its solution to address the global CDS markets at an industry round table hosted by the U.S. Federal Reserve Bank in New York.
Eurex Clearing AG, a subsidiary of the world’s leading derivatives exchange Eurex, provides clearing services for listed futures, options products as well as stocks and certain OTC markets. Its resilient and robust central counterparty clearing model has proven to be an important stabilizing factor in the global financial markets during recent times. Eurex Clearing sets industry leading standards with its real-time risk management and intraday margining.