Deutsche Boerse Plans Revenue-Share Deal to Lure Brexit ClearingBy
Deutsche Boerse AG’s clearinghouse plans to start a revenue-sharing plan with its biggest members in a bid to lure business from London after Brexit.
The Eurex Clearing partnership program will reward its 10 most active participants with a share of revenue, and give board seats at the clearinghouse to the five largest. Deutsche Boerse has already received interest from clearing members including JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG and Morgan Stanley, the company said in a statement Monday.
“This market-led initiative will benefit clients and the broader marketplace through greater choice and competition, improved price transparency as well as reduced concentration risk,” Eric Muller, head of Eurex Clearing, said in the statement.
Clearinghouses stand between the two sides of a trade and hold collateral, known as margin, from both in case a member defaults. It’s a profitable business and Britain’s vote to leave the European Union has made clearing a key battleground for the financial-services industry.
London dominates the business: About 75 percent of trading in euro-denominated interest-rate swaps takes place in the U.K., according to Bank for International Settlements data from April 2016. The London Stock Exchange Group Plc operates the world’s biggest clearinghouse, LCH.