NEWS UPDATE
P O S T-T R A D E
Barclays to provide US client
swaps clearing through Eurex
The move follows a rebrand of Barclays’ agency derivatives services business, and
aims to ensure continued access to market in face of Brexit.
B
arclays has confirmed that it has become the latest
investment bank to provide its clients based in the US
with access to Eurex for clearing of interest rate swaps.
The move makes Barclays the first European invest-
ment bank to offer Eurex over the counter (OTC) clearing
via its US registered futures commission merchant (FCM),
as the clearing house continues its push into North
America.
Speaking to The TRADE, the head of Barclays’ recently
rebranded Prime Derivatives Services business for the
Americas, Stephen Li, said that the decision to connect
to Eurex was driven by client demand for an alternative
liquidity pool in euro interest rate swaps, as well as
incoming regulation and the need for continued market
access in the face of uncertainty around Brexit.
“The challenge is around how we interact with events
like Brexit and regulation. With Brexit, we could poten-
tially see a move away from the dominant clearing house,
which in this case is LCH, and Eurex had anticipated that.
Following Eurex’s recognition in the US as an approved
clearinghouse, we felt that we needed to provide access
to ensure that if there was a shift from a liquidity stand-
point, especially around euro swaps, we would be ready,”
Li told The TRADE.
“This isn’t just about Brexit, it’s also about navigating
new regulations such as the uncleared margin rules. Al-
though the uncleared margin rules won’t hit many of our
clients until 2020, they are far more focused on margin
optimisation, and we have to start thinking about what
that client offering will look like in advance.”
Barclays has recently rebranded its Agency Derivatives
Services business to Prime Derivative Services after
integrating its derivatives clearing and execution services
with the prime brokerage division, as part of a reorganisa-
tion of the business.
“The rebrand to become Prime Derivatives Services, and
bringing the derivatives clearing and execution under the
same roof as the prime brokerage business is the culmi-
nation of four years of restructure and investment. We’ve
grown the business 28% over this same period, our big
focus is on the clients, keeping close to them and what
they need,” said Gary Saunders, head of Prime Derivatives
Services EMEA at Barclays.
Looking to the future, Saunders added that Barclays is
looking more into the evolution of FX post-trade services
as the bank prepares to launch non-deliverable forward
(NDF) clearing later this year.
“FX Prime Brokerage has been part of our prime busi-
ness for over 15 years and FX clearing will be part of the
business when roll out NDF clearing at some point during
the summer for our clients. We think that FX will be the
next area where the industry sees change and evolution,”
he said.
Citi was the first investment bank to offer client swap
clearing through Eurex at the beginning of this year, after
Eurex received authorisation from the US derivatives
trading regulator to operate as an approved clearing
house.
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