Tech Awards: Eurex

Eurex Credit Clear

Eurex Credit Clear became the first central counterparty to clear single-name CDS in July this year. Eurex Credit Clear, established by Frankfurt-based derivatives exchange Eurex, began clearing single-name CDS in Europe, and is presently the only central counterparty to do so anywhere in the world.

It currently offers the seventeen single names of the iTraxx constituents from the utilities sector. And pending regulatory approval, further European single names will be added to provide full coverage of iTraxx constituents.

“Eurex is the only competition to ICE,” says BNP Paribas product developer Cyril Ettori. “Unlike ICE, Eurex has a buy-side offering already in place.”

A representative from a leading hedge fund agrees: “It’s a decent proposal. ICE is very good right now in the US, but Eurex has a better offering in Europe. Having a European option much quicker than the others has to be a selling point. The question mark for people like me, who don’t just trade in one geographical region, is what they’ll do in the US.”

Eurex says the ability to offset margin between listed derivatives and CDS, as well as to backload outstanding CDS, offers collateral management savings to the buy-side.

The hedge fund exec says: “It has a lot that appeals to us. The big attraction was we’d be able to absolutely segregate our margin. Clearing of single names is also a plus, and underlying that is the ease of implementation. The model seems very straightforward.”

The firm also says transaction netting will allow for greater flexibility of CDS being traded across several counterparties, as it can be on a gross or an individual fund basis.

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