Eurex Clearing to Become the World’s First Hybrid CCP
Eurex Clearing is set to become the world’s first hybrid central counterparty (CCP) by integrating traditional and digital financial instruments under one clearing framework. The initiative will bring both markets together through one rulebook, one unified risk model and a shared liquidity pool. It will let native digital instruments, including issuances by the European Stability Mechanism (ESM), be traded on Eurex Repo, cleared by Eurex Clearing and accepted as eligible margin collateral. Also, it will connect traditional and digital markets without creating distinct liquidity pools.
One Framework
Eurex Clearing will integrate native digital instruments into its current clearing ecosystem. It means market participants can access digital markets via their current clearing relationships and infrastructure without setting up separate arrangements. Under the new model, native digital instruments will become tradable on Eurex Repo's GC Pooling segment. Eurex Clearing will clear these transactions and accept the instruments as eligible margin collateral. Also, they will qualify as collateral in the ECB GC Pooling basket. The integration will let digital instruments access Eurex's established and highly liquid secondary market on the same terms as their traditional equivalents.
Concentrating Liquidity
Eurex Clearing strives to prevent market fragmentation by bringing traditional and digital instruments into the same liquidity pool. This approach will let clients participate in digital markets without building separate connectivity, managing different risk models or establishing new legal agreements. As a regulated central counterparty, Eurex Clearing will keep novating and clearing transactions. It ensures settlement finality, multilateral netting efficiencies and effective default management. Eurex Clearing strives to help institutional participants expand their digital market activities and maintain legal and regulatory certainty by bringing both markets under the same structure.
Financial Market Infrastructure
The initiative connects with the vaster digital infrastructure developments at Clearstream, another Deutsche Börse Group company. Clearstream is transforming its central securities depository services to manage traditional and digital assets via its Clearstream Digital Infrastructure. This infrastructure lets clients transfer securities and cash on traditional and blockchain-based ecosystems.
Also, it supports wholesale central bank money through the Eurosystem's Pontes solution. The European Stability Mechanism's recent first live digital native bond issuance demonstrated this capability. Together, Clearstream and Eurex are developing an end-to-end digital post-trade lifecycle. It covers primary issuance, cleared repo trading, wholesale settlement, custody and collateral reuse.
What Executive Says
Laura Bayley, Chief Executive Officer of Eurex Clearing, stressed the importance of linking traditional and digital financial markets rather than developing them individually. She explained that isolated digital markets could fragment liquidity and lock up capital. Instead, Eurex Clearing strives to create a common infrastructure where clients can trade, clear and finance digital assets through their existing relationships.
About Eurex
Eurex is a derivatives exchange based in Germany. It offers trading in varied European-based derivatives. The merger of Deutsche Terminbörse (DTB) and the Swiss Options and Financial Futures Exchange (SOFFEX) established it in 1998. Deutsche Börse AG acquired full ownership of Eurex in 2012.
Wrapping Up
Eurex Clearing's hybrid CCP model aspires to blend digital and traditional financial markets without compromising liquidity or current market infrastructure. The initiative will give institutional participants access to digital instruments through their current relationships and maintain the stability and efficiency of established financial markets.
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