Eurex, the Europe-based international derivatives exchange, has expanded its ISA Direct access model to allow additional clients to access the centrally cleared European repo business.
Firms and their counterparty dealer banks covered under the expansion, ISA Direct Indemnified, will benefit to an even larger degree from the capital and risk management advantages that come through direct access to repo clearing at Eurex.
The move, part of Eurex’s efforts to widen access to secured funding and financing markets, has been accompanied by the publication of a new white paper — Capital efficiencies through direct access repo clearing models for the buy-side — with the go-live of the expansion set for Q4 of this year, pending regulatory approval.
The white paper details how Eurex’s repo clearing models offer dealer banks opportunities for balance sheet, leverage, and risk-based capital optimisation, consequently leading to better execution terms for the buy-side.
With the expansion of Eurex’s ISA Direct model, buy-side firms will be able to directly access CCPs, Eurex says, offering broader access to funding and investment sources.
Eurex Clearing’s repo clearing access models offer banking institutions the opportunity
to maintain the repo trading service offering to their buy-side clients without the disproportionately high leverage capital costs and depressed returns on equity, Eurex adds.
Buy-side firms benefit from improved access to funding, better protection of assets, improved portability in a default scenario and a large liquidity pool through Eurex Repo, the exchange concludes.
Eurex Clearing’s chief strategy officer Matthias Graulich says: “As regulatory capital requirements drive the rationing of scarce balance sheet capacity, the case study in our new paper shows how direct access can deliver significant efficiencies and create capacity for business growth."
