Barclays and HSBC among top clients in Deutsche Boerse's clearing power play

Jasper Jolly
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Deutsche Boerse boss Theodor Weimer has previously targeted a quarter of euro clearing (Source: Getty)

Deutsche Boerse’s clearing arm has lured two of Britain’s top banks into its top 10 members as it quintupled volumes of interest rate derivatives over the course of the last year.

Barclays and HSBC are among the top 10 members by volume clearing swaps with Eurex, parent company Deutsche Boerse confirmed.

The top 10 position will entitle the banks to some of the clearing house’s revenues, as part of a scheme launched by the German exchange to tempt banks to move their euro-denominated interest rate derivative clearing from the London Stock Exchange’s dominant LCH subsidiary after Brexit.

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In October Deutsche Boerse said it plans to give a “significant share” of its profits to the biggest banking members.

Deutsche Boerse boss Theodor Weimer, who replaced his scandal-hit predecessor at the beginning of the year, has previously called Brexit a “historic” opportunity for the firm. Banks' willingness to transfer business from London may also have been boosted by European politicians' calls for euro-denominated clearing to be moved inside the Eurozone permanently after Brexit.

Deutsche Boerse's strategy appears to be working, with the notional volume of over-the-counter interest rate derivatives outstanding more than doubling since the start of the year to reach €6.5 trillion (£5.7 trillion), up from €2.7 trillion in January, according to data from Eurex. The equivalent volumes was only €1 trillion in January 2017.

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Average daily volumes were €71bn in May, with an average since the programme began in January of over €50bn per day, compared to only €5bn before the announcement.

However, the British banks will miss out on seats on Eurex Clearing’s supervisory board, the biggest prize from the incentive scheme, as they did not make the top five clients.

JPMorgan, BNP Paribas, Deutsche Bank, Commerzbank and Landesbank Baden-Wurttemberg were the top five banks by volume, the Financial Times first reported.

Unicredit, Dekabank and Bank of America Merrill Lynch were the other banks in the top 10.

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