Eurex Clearing, the Deutsche Boerse owned central counterparty (CCP) has cleared the first over-the-counter (OTC) interest rate swap transaction for a Japanese securities house since being approved to offer the service in Japan in March.
The transaction was executed by SMBC Nikko Securities with Citibank Global Markets acting as its clearing member.
In March, Eurex Clearing received ‘foreign financial instruments clearing organisation’ status from Japan’s Financial Services Agency (FSA), thereby allowing Japanese financial institutions to directly access Eurex Clearing for swaps clearing.
Eurex says this is an important step as client demand from one of the world’s largest fixed income markets will support the strong momentum of Eurex Clearing’s EU-based liquidity pool for euro swaps. Total notional outstanding of greater than €19 trillion (as of end of May) keeps Eurex’s overall market share at about 18 percent.
“Eurex’s connectivity will provide Japanese clients with a holistic clearing solution, encouraging competition,” says Rohit Verma, Citi’s Asia Pacific head of OTC clearing and FXPB.
Markus Georgi, Eurex’s head of fixed income sales Asia, explains: “Adding Japan as an eligible jurisdiction for our OTC Clearing offering, followed by the first transaction cleared for SMBC Nikko Securities, marks a very important milestone for Eurex Clearing on our way to become the home of the euro yield curve.”
Shun Yanagisawa, Citi’s Japan head futures, OTC clearing and FXPB, adds: “Our comprehensive clearinghouse connectivity allows our clients to access the deepest pools of liquidity while navigating the challenges of CCP basis.”
