Eurex Clearing sets sight on UK market

Eurex Clearing sets sight on UK market

Deutsche Börse's clearing subsidiary Eurex Clearing has applied to UK financial regulators for permission to operate in London.

The Frankfurt-based central counterparty has applied to the Financial Services Authority for recognition as an overseas clearing house and says it plans to increase its physical presence in the UK and to engage in increased marketing "in order to increase its UK membership and promote increased use of its facilities by existing UK clearing members".

Eurex Clearing says it is also possible that it may offer services in relation to new products "which are likely to be of interest to the UK market".

The UK's Office of Fair Trading (OFT) is currently conducting a competition assessment of the application and has posted a notice on its Web site inviting comments from interested organisations.

A possible move by Eurex Clearing into the UK market could result in the German exchange coming under renewed pressure to allow more competition in its own home market.

German laws have so far made it difficult for foreign clearers from establishing operations in the country. Deutsche Börse has been criticised by investment banks for restricting competition on its home turf and preserving its monopoly status as a provider of securities trading and post-trading services.

In assessing Eurex Clearing's application, the OFT says it is likely to pay particular attention to the applicant's rules on participation criteria, its arrangements with those exchanges for which it clears trades and its arrangements for the settlement of trades.

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