Clearing banks feel pinch as rates turn negative

Negative returns on dollar deposits at Eurex, Ice and LCH spur talk of business model change

Rate cuts and bond-buying by the Federal Reserve might have insulated the global economy from the worst impacts of the coronavirus – but it’s done little to help the business model of futures commission merchants. Compressed rates around the world are putting the squeeze on clearing firms, as the dollars they deposit at central counterparties start to earn negative rates, prompting many to talk openly of a fundamental revaluation of the economics of clearing.

“If you don’t want to lose heaps of