Deutsche Boerse has stepped up its challenge to the Square Mile by expanding its clearing house partnership, as rival cities bid to replace London as Europe’s financial capital after Brexit.
The London Stock Exchange Group’s LCH is currently Europe’s hub for clearing euro-denominated derivatives – used by firms to balance risk – and has become central to the debate over the future of financial services after Britain leaves the EU.
Following the changes announced today the Frankfurt-based Eurex Clearing partnership will include repurchase or repo agreements and foreign exchange traded among banks. The more volume that users pass through the platform, the bigger the share of profit they will get.
Eurex Clearing chief executive Erik Muller said: “The extension of the partnership program further enhances choice and innovation in the marketplace.
“Market participants now can tap the full benefits of Eurex Clearing’s integrated value proposition across fixed income derivatives, Repo and FX markets.”
Euro-clearing operations have emerged as a Brexit negotiation battleground as some EU policymakers have advocated limiting euro-denominated contracts, into the single currency area.
However, industry figures have urged the EU to prevent the disruption of financial services in the event of a no-deal Brexit.
Earlier this month the Bank of England doubled down on its call to the EU to stop using clearing as a bargaining chip in a "game of high-stakes political poker" which could damage global financial stability.