The new services will be introduced in the context of the upcoming regulatory reforms expected to require mandatory clearing for standardized OTC derivatives in the US and Europe.
Currently, Eurex’s OTC Clear service comprises OTC-traded Eurex look-alike futures and options on equities and interest rates as well as Eurex Credit Clear, a clearing service for OTC credit default swaps.
Thomas Book, Eurex Executive Board member responsible for Eurex Clearing, said the further expansion of their product coverage is an important part of their strategic agenda enabling their customers to prepare for the new regulatory environment.
"We will offer all clearing services in the relevant asset classes to our clearing members and buy-side clients to comply with new requirements in the most effective and capital efficient way," Book said.
According to Eurex Clearing, in addition to the expansion of the Eurex OTC Clear service, its strategic agenda includes two further major initiatives focusing on risk management and safety for OTC derivatives.
First, Eurex Clearing will introduce a new Client Asset Protection service for its listed and OTC markets, which will be launched beginning in second quarter of 2011 in close coordination with market participants.
The Client Asset Protection service will offer full protection of client assets within the clearinghouse and allow for immediate portability of positions and assets in case of a clearing member default.
Second, Eurex Clearing plans to introduce a new risk methodology for the clearinghouse, which will be portfolio-based rather than instrument focused as in many current CCP risk management approaches.
"The new risk management approach will further contribute to the safety of the derivatives market, while delivering capital efficiencies to our clients by providing offsets particularly between Eurex’s listed derivatives and OTC-traded derivatives," explained Book.
