NeoClear, a challenger clearing house, is being built to respond to a structural gap in European markets: at a time of tighter capital, regulatory pressure, and a growing focus on resilience and sovereignty, Europe still relies heavily on non-EU clearing capacity.
That leaves the market exposed to concentration, inefficiency, and strategic dependence in a part of the system that is too important to treat as an afterthought, say NeoClear’s founders.
Paul Whitehead, founder and CEO, Helena Frumson, co-founder and chief strategy officer, and the rest of the team, are building NeoClear as a low-touch, high-tech clearing house shaped in close engagement with the institutions that will rely on it. The model is practical from the outset: work early with buy side firms, banks, policymakers, and market participants, and build something that can hold under the market conditions and offer alternative and larger clearing capacity.
NeoClear is supported by a senior advisory board: Joanna Nader, ex-group head of strategy at TP ICAP, and Christian Reuss, former CEO of SIX Swiss Exchange.
Does Europe’s reliance on non-EU clearing infrastructure create efficiency benefits or introduce longer-term market and systemic risks?
Whitehead: Although there is a benefit of clearing all transactions at a single central counterparty (CCP) by maximising netting to reduce margin amounts, doing so creates significant concentration risk, even if the single CCP has deep liquidity.
Post-Brexit, the European Union is becoming increasingly nervous about the limited control and ability to manage crises in the event of disruption to non-EU clearing infrastructure, such as Liz Truss’s mini budget in September 2022. There is the risk of diverging rules and regulations, reduced supervision and dependence on equivalence.
Europe is reducing its reliance on London strategically over several years by ending the equivalence agreement in 2028 and implementing the Active Account Requirement (AAR) as part of EMIR 3.0.
Where are the main constraints emerging in practice around capital efficiency, clearing, and balance sheet usage?
Whitehead: The costs of maintaining an executed OTC derivative transaction are significant, with the market participant having to post margin to the CCP for the life of the trade. Margin is made up from variation margin, initial margin, and a contribution to the default fund. Currently, only high-quality instruments can be posted to meet the margin requirements, such as cash and government bonds. However, treasurers have illiquid and digital assets available to post, even with aggressive haircuts.
The margin problem is multi-dimensional. On the one hand, there is an objective to minimise the amount of initial margin by optimising netting, but then there is also another objective to minimise the funding costs related to the physically posted margin itself.
If treasury functions can post illiquid or digital assets as margin, then they can reduce their overall funding costs significantly. However, this requires significant changes to the EMIR rules. Much work is being done in this space with regulatory working groups in place.
How are differences between UK and EU market infrastructure affecting competitiveness, liquidity, and clearing efficiency?
Whitehead: The choice of CCP when clearing OTC derivative contracts in the UK and EU is extremely limited, with only two having adequate liquidity; LCH in the UK and Eurex in Germany.
Most market participants that trade EUR OTC derivatives currently prefer LCH over other clearing options. If they are forced to clear transactions in the EU from the end of equivalence or from AAR, they want to have a number of CCPs to choose from. Although this might increase execution costs due to fragmented liquidity, having more CCPs in the EU would drive down the clearing costs due to market competition. As this is not the case currently, costs are increasing year-on-year.
NeoClear will provide a new clearing solution in Europe that will give market participants a choice and drive down overall industry costs.
What impact will the upcoming ESMA June 2026 milestone have on market participants and infrastructure planning?
Whitehead: The EMIR 3.0 AAR was created to increase clearing volumes at European CCPs and reduce the dependence on third-country market infrastructures. As things stand, all market participants that clear EUR OTC derivatives must have a live account created at a European CCP, such as Eurex. This ensures that all system connectivity and legal agreements are in place. To ensure this is the case, AAR demands that a minimum number of transactions (representative trades) be cleared at the European CCP each year (currently five).
By mid-2026, firms must submit their AAR data based on the previous 12 months. The European Securities and Markets Authority (ESMA) will review this data and decide on next steps.
There are many factors that will drive any decision to increase the number of representative trades, such as liquidity conditions in EU CCPs, regulatory and political pressures, and operational readiness.
Another major consideration is the European Commission’s extension of the equivalence agreement for UK CCPs to clear EUR OTC transactions until 30 June 2028.
In order for the European Union to end this agreement in 2028, the number of representative trades must be increased significantly. However, since there has been little change in the clearing landscape in Europe over the last few years, regulators might be cautious to increase it significantly.
The direction of travel is clear and undisputable though — there will be more EUR OTC derivative transactions cleared at European CCPs going forward.
What does it take to build a new market infrastructure project like NeoClear?
Whitehead: Creating and launching a new market infrastructure requires stamina, discipline, and a clear, consistent vision. The journey from concept to clearing the first transaction takes years, and along the way, hundreds of decisions shape and refine the strategy.
From day one, my vision for NeoClear was to deliver an almost transparent clearing solution, combining advanced reporting with sensible pricing, designed from the ground up with input from its future members. In this day and age, technology should allow the CCP to function seamlessly, with live reporting on any device (including push notifications and user limits), with minimal interaction from the member. Post-trade execution should be efficient and unobtrusive, not a drain on resources for firms active in OTC derivatives.
As with building any new market infrastructure, there are many key components that must be worked on in parallel including regulatory license, buy side and bank support, infrastructure design, system providers, raising funding, and navigating an evolving political and regulatory landscape through ongoing dialogue with the European Commission and supervisory authorities.
Maintaining focus over such a long horizon is not always easy, but the level of engagement and demand we see from future members continues to reinforce our direction. Every conversation we have with our future members helps reaffirm our commitment to deliver a clearing solution that meaningfully improves how the market operates.
Frumson: Building new infrastructure starts with the same question as any serious venture: where is the systemically important gap, and can it be addressed in a way the market will actually use and support?
In our case, that discipline is immediate and reinforces Paul’s vision. When the founding team is the first capital in, there is very little room for vanity, drift or theory detached from commercial reality.
What makes infrastructure different is the level of alignment required to make the model viable. You are not launching a standalone product into the market and encouraging the adoption to follow. You are building something that must fit into a large system of clients, banks, vendors, regulators, investors and public institutions, each with legitimate interests, constraints, and consequences that we respect.
That is why ecosystem engagement is part of the build. Large-scale infrastructure only becomes viable when it is shaped with the market.
The ambition is clear: deliver a low-touch, high-tech clearing house to a market need that is already widely recognised, and do it in a way that creates lasting trust and value across participants.
What does listening to clients and partners mean in practice when bringing a new venture to life?
Whitehead: Clearing is not a core part of most businesses; it does not drive revenues or help gain market share, but is a requirement of executing OTC derivative transactions, whether that be for risk management or for other reasons.
Yet the options for clearing EUR OTC derivatives remain limited, with only a small number of CCPs providing the service. While they offer a broad range of capabilities, the important question remains: are they truly designed around what clients want?
When I started designing NeoClear, I made two early decisions. First, as a client-driven market infrastructure, the CCP had to be built around the needs of its future members. Second, we would focus on doing one thing exceptionally well, clearing OTC interest rate swaps.
With this foundation in place, we established a client working group comprising many of the largest buy side firms and regional banks, representing €6 trillion in AUM. Its purpose was simple, to embed client input directly into the design from the outset, ensuring the model evolved in line with real user requirements.
In parallel, we engaged extensively with banks to explore how NeoClear could reshape the European clearing landscape. Involving them early allowed us to refine the model further and align it with the practical needs of clearing participants.
As we move into execution and launch, continuous engagement with future members remains critical, ultimately leading to a clearing solution that is for the members, designed by the members, supported by strong partnerships across infrastructure providers, regulators, and a growing ecosystem.
Frumson: Listening sounds obvious. In practice, many ventures still substitute conviction for evidence and assumptions for market truth. That becomes expensive very quickly.
I spend a great deal of time around early and growth-stage businesses through board dialogues, mentoring and guest lecturing, and one pattern appears repeatedly: teams fall in love with their own logic before the market has validated it. In less demanding sectors that may simply slow growth. In infrastructure, it can become a significant or fatal design flaw, and hence I love Paul’s leadership and conviction of putting clients at the centre.
At NeoClear, listening means more than collecting feedback. It means testing assumptions early, hearing objections properly, and allowing serious market input to shape decisions before they become expensive to reverse. That does not mean changing direction every week, of course. It means being disciplined enough to adapt when the evidence warrants it.
The same principle has applied across other initiatives Paul and I have co-founded, including Invarix, an innovative clearing reporting tool. The market usually tells you where the friction is, where the priorities have moved, and where a seemingly elegant solution fails under real conditions. If you listen closely enough, clients and partners do not just validate demand. They help define the architecture of what can hold going forward.
That is the objective: precise solutions to concrete market demands, built in a way that supports the institutions using them as well as the business behind them.
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