To support buy-side clients starting clearing OTC interest rate derivatives positions in the EU, Eurex Clearing is now offering special incentives. This is a further step in support of the regulatory objectives to bring more Euro Clearing into the EU and in turn reduce reliance on CCPs outside the EU.
The new program is designed to incentivize clients running active accounts in the EU. When starting the clearing of OTC Interest Rate Swaps (IRS), Overnight Index Swaps (OIS), Basis Swaps and/or Zero-Coupon Inflation Swaps (ZCIS) at Eurex Clearing in 2023 they may qualify for an incentive reward of up to EUR 50,000. The qualification period runs from 1 January 2023 to 31 December 2023. Based on Eurex’s current eligible client base the incentive pool can get as high as EUR 25 million.
Matthias Graulich, Member of the Eurex Clearing Executive Board: “With this targeted incentive program for buyside clients, we again demonstrate our strong commitment for a market-led solution which is designed to further accelerate the development of a liquid, EU-based alternative for the clearing of OTC interest rate swaps. Especially against the backdrop of enduring uncertainty, changing rates and an increased need for hedging a broader marketplace through greater choice, improved price transparency, as well as reduced concentration risk is more important than ever.”
After prolonging the equivalence of UK CCPs until 30 June 2025 earlier this year, the European Commission had reiterated its financial stability concerns and renewed its call on market participants to use that period to substantially reduce their exposures to UK Market Infrastructures.
In the meantime, more than 600 clearing members and buy-side clients have been on-boarded by Eurex Clearing for swaps clearing. Notional outstanding in OTC interest rate derivatives rose by 40 percent since the beginning of the year to EUR 28 trillion in mid-October. The market share is roughly 20 percent.
The new program is complementing the CCP Switch Incentive Program under which positions in OTC interest rate derivatives transferred to Eurex Clearing are completely exempted from booking fees. Besides, Eurex Clearing opened its governance structure and shares a significant part of the revenues of its interest rate swap segment with the most active participants within the scope of the Eurex Partnership Program.
Eligible clients may register for the incentive program until 31 March 2023. More details can be found here.