Users of the new risk system Eurex Clearing Prisma can now benefit from portfolio margining capabilities within an asset class as well as cross margining between listed fixed income products and the OTC interest rate swap business.
Commerzbank Corporates & Markets, Citi and Morgan Stanley are among the firms that are using the second release of Eurex Clearing Prisma, which promises potential margin efficiencies of up to 70 percent depending on the nature of individual portfolios, according to the European central counterparty (CCP).
The service, in operation since the end of May, allows clearing users to offset margin between listed fixed-income and money market derivatives.
They can also use their existing portfolios in these interest-rate derivatives traded at Eurex Exchange to offset their margin requirements for their interest rate swaps cleared via EurexOTC Clear.
“Cross margining solutions allow clients the potential to secure capital efficiencies, and it is likely to be a powerful driver of clearing flows and liquidity going forward as the OTC clearing market matures,” commented Nick Chaudhry, head of OTC clearing at Commerzbank Corporates & Markets.
Silas Findley, Europe, Middle East and Africa head of OTC clearing at Citi, added: “Clients are increasingly focused on the complete front to back clearing experience, from ease and quality of execution to the optimisation of collateral and other post-trade processes.”
“We expect that the ability to provide meaningful margin offsets will become a key differentiator amongst clearing platforms going forward. We are pleased to be working with Eurex Clearing to offer cutting edge cross margining solutions to our clients.”
“As the first European CCP we are enabling our customers to cross-margin within listed asset classes and across OTC and listed derivatives markets. Eurex Clearing Prisma incentivises holding balanced portfolios which represent lower risk and have lower capital and funding requirements thus creating a win-win situation for the markets we clear,” commented Thomas Laux, chief risk officer at Eurex Clearing.
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