Eurex Clearing Clears First Cross-Currency Swap Transactions

Eurex Clearing, a central counterparty clearing (CCP), announced this Thursday that its over-the-counter (OTC) foreign exchange (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) clearing service is up and running, having cleared the first cross-currency swap transactions.

J.P. Morgan and Morgan Stanley were the first OTC forex clearing participants for the CCP, having submitted the first trades to be cleared through the service. Eurex Clearing’s OTC FX service currently offers interdealer clearing of EUR/USD and GBP/USD cross-currency swaps of up to 50 years’ maturity.

Part of the Deutsche Börse Group, Eurex Clearing, in addition to cross-currency swap transactions, also clears deliverable FX spots, FX forwards and FX swaps of up to two years which are executed at 360T, Deutsche Börse’s FX subsidiary.

Commenting on the announcement, Erik Müller, Chief Executive Officer of Eurex Clearing, said: “With the successful completion of these first transactions, we have taken an important step in delivering greater efficiencies to the FX market.

“Clients will benefit from significant capital relief and cost savings when centrally clearing their OTC FX exposures. Our objective is to build a cleared FX Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term pool over time, as further clients decide to utilize our new FX clearing services.”

Eurex Clearing plans service extensions in 2020

In 2020, Eurex is planning to extend the service by launching client clearing. This will allow clients of Eurex and 360T to increase their operational efficiencies by using a single clearinghouse across multiple exchange-traded and OTC forex products, the statement said.

“Cross currency swaps play an important role in the flow of capital through the international markets,” added Charles Bristow, Head of Rates, Fixed Income Financing and Credit Portfolio Trading, J.P. Morgan.

“Moving to a centrally cleared model is a significant moment for the asset class as it reduces the complexity linked to large bilateral counterparty exposures, enhances resource efficiency and increases overall marketplace resilience.”