London (Reuters) – Relocating euro clearing from London to the European Union must be “market-led” rather than forced, with the change already well underway, the president of Eurex Clearing said on Tuesday.
The European Union has announced it will not allow EU market participants to clear euro derivatives in London after June 2025, citing a need to remove its strong reliance on that market in the same way the bloc is lowering dependency on Russian energy.
Brussels will propose a bill later this year with “incentives” to relocate euro clearing from the London Stock Exchange , which dominates euro clearing, to Eurex in Frankfurt, using a likely combination of statutory and voluntary measures.
Erik Mueller, Chief Executive of Eurex Clearing, said market participants demand competition and Eurex now accounts for 27 trillion euros ($28.83 trillion) in euro swap contracts, a 20 percent market share.
“The trend is apparent,” Mueller told the IDX derivatives industry conference, adding that the “pie” will grow to balloon volumes more.
“We will continue advocating for a market-led approach that would be the best conclusion for everyone.”
Julien Jardelot, Head of Europe at the London Stock Exchange Group (LON:LSEG), said EU firms clear more in non-euro currencies than in the euro and require continuing access to London to avoid a spike in costs and risks.
Julia Kolbe, head of markets policy at Deutsche Bank (ETR: DBKGn) , said requiring EU pension funds to clear their derivatives in the bloc and increasing the choice of cleared instruments would increase liquidity, a major EU priority.
There was a need to examine giving EU liquidity providers access to clearing pools outside the bloc after June 2025, Kolbe added.
Donna Rix, chief counsel in Europe for Citadel Group, said the benefits of controlling all clearing risks and currencies in one place cannot be overlooked since separating clearing across two operators will raise expenses.
“We strongly urge for voluntary market-driven initiatives,” said Bruce Savage, president of the European derivatives industry association FIA.
($1 = 0.9367 euros)
