Robbert Booij

The asset class is increasingly becoming a buy-side topic said experts as end clients are voluntarily joining the cleared repo environment, viewing it as a neat instrument to facilitate trading. 

Erik Müller, chief executive of Eurex Clearing described repo as “the oil in the wheels of financial markets,” and a key priority for the business going forward.

In 2017, the area was “barely double digit” and now boasts triple digit revenue – with this significant growth put down to clients looking to finance their undertakings and mobilise collateral to get cash. 

Speaking to the reasons in more depth, Müller explained it was down to “the successful risk management mechanisms of CCPs, including initial margin and variation margin.” 

Specifically, variation margin refers to the margin to margin each day, while initial margin makes up the part of margin that covers future market moves.

“Those two together means that end clients really need a mechanism on how to transform the securities that they own into cash if needed, as variation margin is cash only at the CCP,” added Müller.

“That’s why if you look at our repo franchise, some of our biggest clients nowadays are different from 24 months ago – for example, Dutch pension funds have become some of our largest repo clients.”

Read more: Carrot or stick? How the EU plans to reduce reliance on UK CCPs for derivatives clearing

Repo made up one of three key pillars highlighted by Müller, along with exchange traded derivatives (ETD) and interest rate swaps (IRS). In addition, retail trading was also cited as a key area of focus as market structure changes and increasing focus across the region continues to grow.

Robbert Booij, chief executive of Eurex Frankfurt, highlighted the significant opportunity Europe has to embrace retail across Europe, describing the area as “a missing customer group for European markets as a whole”.

He explained: “It’s difficult also to make markets more attractive for retail investors, but we do believe we have a very good opportunity as we have the equity and fixed income products and mini futures, and we are also open for 23 hours a day – so all the infrastructure and the capabilities are there.”

The retail market in Europe is of course considerably smaller than in jurisdictions such as China and the US, the first and second biggest retail markets respectively, with fragmentation both jurisdictionally and culturally a key factor across the EU. 

Read more: The relentless rise of retail trading

Booij asserted that though numerous cultural and regulatory factors are significant and perhaps unable to be combated, there are practical steps that can be taken across the region to open it up to the retail market.

Specifically, making sure that retail investors are well educated on the risks involved with investing in derivatives, and making clear exactly how derivatives can fulfil a very good, cost-efficient way of getting exposure. 

Further, the harmonisation on the payment for order flow ban in Europe is also set to potentially create additional interest in derivatives investing.

“It’s education, it’s product offering, and marketing potentially as well [that will boost retail trading]. We see that many other exchanges in Europe are doing the same but it’s important to emphasise that we also will remain very careful as well to make sure that we do not create a situation where retail investors make uninformed decisions.”

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The move builds upon the launch of FTSE Bitcoin index futures and options last year, falling in line with Eurex’s goal to offer secure access to cryptocurrencies in a regulated market environment.

Read more: Eurex becomes first European exchange to launch Bitcoin index futures

According to the exchange, there is significant trading and hedging demand from institutional and professional customers for Ethereum, as reflected in record trading volumes in derivatives and other investment products.

“We look forward to expanding our offering in crypto derivatives together with FTSE Russell and Digital Asset Research for our clients,” said Randolf Roth, member of the Eurex executive board.

“As one of the world’s leading CCPs Eurex offers trading on a regulated exchange and is therefore the right partner to enter the crypto space for institutional clients.”

The new options and futures are listed in EUR and USD, with the respective FTSE Ethereum index as the underlying. The contract size is equivalent to 10 Ether, which is approximately $35,000.

Both of the contracts are cash settled and expire on the last Friday of each month. Monthly and quarterly maturities will be available, alongside weekly expiring contracts for options.

“We are delighted to support the expansions of Eurex’s digital assets ecosystem with the offering of futures and options on the FTSE Ethereum index,” said Kristen Mierzwa, head of digital assets at FTSE Russell, an LSEG business.

“In association with the experts at Digital Asset Research we have established an industry standard for assessing underlying digital asset and exchange inclusion. We have applied this vetting methodology to offer indices reflective of the real investable market.”

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Imanol Urquizu

The Spanish asset manager has begun to expand its FX futures business to Eurex, supported by Banco Santander as clearing member and Deutsche Bank as liquidity provider.

The move from Santander Asset Management emphasises the growing trend towards listed FX business, in which market participants are utilising listed FX derivatives to hedge their portfolio performance.

“By now trading and clearing listed FX derivatives on Eurex, Santander Asset Management benefits from low exchange fees and regulatory certainty within the EU,” said Jens Quiram, global head fixed income and currencies (FIC) derivatives and repo sales at Eurex.

In addition, Santander has stated plans to establish FX options business at Eurex. Backed by Deutsche Bank, the asset manager traded the first FX options block trade ever at Eurex.

“In addition to our engagement in FX futures we actively collaborate with multiple FX dealers to explore the trading of FX options at Eurex,” said Imanol Urquizu, head of derivatives at Santander Asset Management.

“Integrating FX futures and FX options within the Eurex ecosystem unlocks operational efficiencies and enhances our risk netting capabilities.”

Mario Muth, global head of platform and listed derivatives sales and head of fixed income market structure at Deutsche Bank, added: “Trading FX on Eurex enables clients to benefit from the efficiencies of a listed derivatives market, and this is a prime example of how Deutsche Bank partners with clients and trading venues to provide liquidity and solutions in the evolving FX market.”

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Randolf Roth

The tie-up will enable interoperability between Wematch’s total return swaps (TRS) module, which automates trade matching and collateral optimisation, with Eurex’s BTRF products. The ‘futurisation’ of synthetic equity financing is designed to provide portfolio margining efficiencies and streamlined operations. 

“Collaboration with leading industry innovators like Wematch is essential for Eurex to continue evolving our pioneering BTRF product suite to meet increasing global demand,” said Randolf Roth, member of the executive board at Eurex. “By harmonising our respective strengths in synthetic product innovation and TRS lifecycle management expertise, we can radically enhance and optimise the entire value chain for BTRF users worldwide.” 

The two firms hope to improve the end-to-end workflow for BTRF market participants – from basket construction and pricing to trade execution, lifecycle events like amendments and substitutions, and ultimately streamlined clearing and settlement. 

“Partnering with Eurex creates immense opportunities to optimise an increasingly critical area of the securities finance ecosystem,” added David Raccat, chief revenue officer and co-founder of Wematch. “Synthetic products are vital for efficient capital deployment and portfolio utilisation, and BTRFs represent a paradigm-shifting innovation layering exchange benefits onto this model. Our transformative partnership will empower market participants to seamlessly access and capitalise on these pioneering instruments and leverage our cutting-edge workflow tools on Total Return Swaps.” 

The roll-out will be staggered in strategic phases over the coming months, with the full integration across pricing, execution and lifecycle management targeted for a Q3 2024 launch. 

The partnership follows a recent expansion of Eurex’s partnership with Euroclear Bank, with clients of both organisations now able to post collateral directly to Eurex Clearing, with the ability to further optimise the pool of collateral held in Euroclear’s international central securities depository (ICSD).

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Clients of both the Brussels-based Euroclear Bank and Eurex Clearing will now be able to post collateral directly to Eurex Clearing, with the ability to further optimise the pool of collateral held in Euroclear’s International Central Securities Depository (ICSD).  

“We are excited to have Eurex Clearing joining the group of CCPs using our services to support their critical margining activity.” said Olivier Grimonpont, managing director, head of product management, market liquidity, Euroclear. “As an open financial market infrastructure we continuously strive to benefit our ecosystem by creating efficiencies which contribute to a more stable, secure financial marketplace, providing the best in class service to clients.” 

According to Euroclear, the service offering will increase operational efficiency for market users and streamline the collateral management process. 

Matthias Graulich, chief strategy officer, member of the executive board of Eurex Clearing said: “We are pleased to offer Euroclear Bank as an additional securities collateral location for provision of margin and default fund contributions. With this service we jointly create added value for our clients by facilitating a smooth access to the CCP and by enabling efficiencies across the clearing community.” 

Graulich further added: “Euroclear Bank strengths our offering for the buy-side clients and complements our existing services such as ISA Direct and ISA Direct Indemnified clearing models.” 

The agreement builds on the existing partnership which sees Eurex Clearing already use Euroclear Bank as an eligible securities settlement location. 

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Randolf Roth

Randolf Roth, member of the Eurex executive board, said: “Eurex reinforces its commitment and continues to lead in delivering innovative solutions that address increased capital requirements by offering important capital efficiencies to our sell-side and buy-side customers. We are pleased to work with MSCI to further strengthen and expand the TRF success story.”

Specifically, the TRF’s, denominated in US dollars, will launch on: MSCI World Index, MSCI EAFE Index, and MSCI Emerging Markets Index.

The underlying benchmark US funding rate is SOFR, initially available during US trading hours before further expansion into European morning and Asian trading sessions later in 2024.

According to Eurex, “TRFs’ objective is to replicate the returns of traditional bilaterally negotiated equity or equity index-based swaps. However, compared to swaps, central clearing enables portfolio margining, simplifies settlement, and mitigates counterparty risk.” 

Eurex’s TRF suite – launched in 2016 – already includes benchmark Index TRFs, individual Equity TRFs and Basket TRFs. Currently, the open interest in TRFs at Eurex is more than 3 million contracts, €125 billion in notional terms. 

Read more: Eurex names ex-ABN AMRO Clearing Bank chief exec as new CEO

“We’re pleased to work with Eurex as they expand their TRF segment to include MSCI Indexes. This reflects the increasing demand for cleared and listed TRFs on global benchmarks, offering enhanced capital efficiencies to market participants,” said George Harrington, managing director of MSCI.

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Robbert Booij is set to take over as chief executive of Eurex Frankfurt AG, effective from 1 July 2024, succeeding Michael Peters in the role. Booij, who is joining the Eurex executive board in May, most recently served as chief executive of ABN AMRO Clearing, having been appointed in 2018. He has also previously held senior positions at: ICE Clear Netherlands, AFN, and the FCA. Booij is also currently chair of the European Advisory Board and member of the Global Board at FIA, as well as having previously served as chair of the Eurex exchange council. 

Abhay Kumar Sinha was named co-head of credit trading, Asia Pacific at Barclays, set to lead the credit business alongside James Roberts. Sinha has held numerous senior positions during his 25 years in the credit industry, having most recently served at Deutsche Bank for seven years, including as managing director and head of special situations – Asia. He also led Deutsche Bank’s corporate financing business in India and contributed heavily to the development of the bank’s structured finance business across south and southeast Asia. 

Mark Burgess joined commodities specialist Marex as equities trader following a 14-year stint at Winterflood Securities. Burgess joined market maker Winterflood back in 2009 and has served as European equities trader, head of European market making, and most recently UK equities trader. Burgess’ appointment follows two other traders, Ben Ralph-Davies and Joel Russell, who left Winterflood’s London business last year to join rival market maker Shore Capital, according to sources. 

Virtu Financial appointed Simon McGhee in an exchange-traded product (ETP) and fixed income sales role. McGhee joined Virtu Financial after a career break, which followed a nearly eight-year stint at Bluefin Europe. While at Bluefin, McGhee most recently served as a partner – a position he held for 10 months. Prior to that, he was director, head of ETF business development at the firm. Before joining Bluefin, McGhee held an iShares capital markets role at BlackRock for three years. His previous roles include stints as a portfolio/ETF execution trader at Barclays Capital; pan European sales trader at Blue Oak Capital; stockbroker at Compagnie Financial Tradition; equity dealer at City Equities.

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Michael Peters

Michael Peters, chief executive of Eurex Frankfurt AG since July 2020 and member of the Eurex executive board since 2006, has decided to step down at the end of June and to retire in 2024 later this year. 

Speaking to his departure, Peters said: “I am very pleased of what Eurex has achieved in the last 25 years. I am extremely grateful to the entire team and our clients for supporting us and me personally to grow Eurex as a globally leading marketplace. I cannot think of a better successor than Robbert. I am convinced he will drive Eurex passionately forward.”

Read more: Eurex focused on harmonising onto one risk management framework

Booij, who is joining the Eurex executive board in May, most recently served as chief executive of ABN AMRO Clearing, having been appointed in 2018. 

He has also previously held senior positions at: ICE Clear Netherlands, AFN, and the FCA. 

Booij is also currently chair of the European Advisory Board and member of the Global Board at FIA, as well as having previously served as chair of the Eurex exchange council. 

“I know Eurex well from my current role at ABN AMRO Clearing Bank N.V. and had the honour to be the Chairman of the Eurex Exchange Council. Eurex is a global derivatives powerhouse, both in trading and clearing,” said Booij.

“I feel very privileged to be appointed as CEO of Eurex Frankfurt AG. I am excited to work with the team and Eurex’s clients in my new role, and to build upon the great achievements delivered under the leadership of Michael.”

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Starting from 22 January, Eurex will begin trading futures on SRI indices calculated by STOXX and MSCI, strategic partners in Eurex’s offering of derivatives on ESG indices. 

The STOXX Europe 600 SRI index will be used by the new derivatives contracts, as well as MSCI’s SRI index suite, covering Europe, USA, world and emerging markets. 

Contracts based on SRI indices will meet growing demand for an advanced ESG methodology, according to Eurex.

“We are very pleased to further strengthen our leading role in the ESG segment with two strategically strong index providers,” said Randolf Roth, member of the Eurex executive board.

“Our offering will certainly appeal to new user groups that have stricter ESG mandates and need to invest responsibly, such as asset managers who invest on behalf of endowment funds or foundations.”

Read more: Eurex focused on harmonising onto one risk management framework 

Eurex stated that the product launch will be supported by a liquidity provider scheme, offering regular rebates and revenue sharing elements.  

Derivatives on ESG indices were first launched by Eurex in February 2019 and since then, total volume reached nearly 11 million contracts by the end of 2023.

Average daily trading volume last year was more than 12,000 contracts, with annual trading volume roughly 5% above 2022.

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Michael Peters

At a recent roundtable, Deutsche Börse Group derivatives exchange, Eurex, shared its plan to harmonise onto one risk management infrastructure over the next two years.

Speaking to the priorities for the business generally, Michael Peters, chief executive of Eurex Frankfurt AG, asserted that “risk management is top of the agenda for both the trading side and the clearing side.”

Almost a decade ago, back in 2014, Eurex clearing was a leading innovator when it came to real-time risk management. Today, the attention for the next two years is on harmonising onto one risk management infrastructure. Peters specifically highlighted putting Eurex’s MTF and trading pools onto one joint offering which would also likely include European Energy Exchange (EEX) and European Commodity Clearing (ECC) on the commodity side, as well as the repo business.

Matthias Graulich, chief strategy officer at Eurex and global head of fixed income, funding and financing strategy and development at Deutsche Börse Group, expanded on this, explaining: “The intention is to offer all financial products denominated in euro within the same legal, operational and risk management framework.

“In terms of what belongs in this ecosystem are long-term European government bond futures and options (Eurex is in the advanced stages of launching an EU bond future potentially in 2024), euro denominated interest rate swaps, futures and options on short-term Euro interest rates Euribor and €STR, as well as the repo business.”

Currently, Eurex’s offering allows clients to trade repos with more than 160 registered participants and allows participants to raise or place cash against over 13,000 securities, both domestic and international. 

Earlier this year, Eurex confirmed that it had seen a significant increase in trading activities and reached record volumes in its cleared repo markets – doubling across all markets year on year as of August 2023.

Speaking at this most recent roundtable, Graulich expanded on the growth of the repo business: “What we have seen is that this business has gotten more and more attractive again because excess liquidity in the market is shrinking as central banks take a step back out of this market.”

The execs also discussed the growth of their pension fund client base amid the changes being seen, emphasising that pension funds are moving into the repo market as they bank on more reliable liquidity in times of market stress.

“We see that pension funds are very interested in cleared repo because they get better rates, it’s operationally quicker, and they have a much broader choice of execution counterparties and ultimately face the CCP, which is also from a credit perspective preferable, said Graulich.

Speaking to this shift in more detail, he added: “The main reason why pension funds were for so long exempted from swaps clearing was the risk that if there was a large interest rate move that they wouldn’t have access to sufficient liquid resources to fund variation margin on the swap side.

“Now one driver for these pension funds to go into the cleared repo market is that this liquidity pool is much more reliable in market stress situations relative to the bilateral repo market. In particular when it comes to market stress liquidity in the cleared market increased whereas it dried up usually in the bilateral market.”

Read more: Eurex lures euro clearing volumes to Europe post-Brexit with new buy-side incentive scheme

Elsewhere, Graulich highlighted that credit index futures are also seeing more appetite from the market and are continuing to progress.

“While these volumes and activities are still small, we see a lot of interest. Clearing brokers are getting ready to support the product and liquidity providers are already engaging in the topic. Additionally, end clients in particular are showing interest also in the credit future side because it’s such an efficient tool to manage risks and take a perspective on credit.”

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