Eurex and Eurex Clearing

Eurex was formed in 1998 when the German futures exchange DTB and the Swiss options and futures exchange SOFFEX merged. It traded electronically from the start, when many derivatives markets still used open outcry on a trading floor. Deutsche Börse became its sole owner in 2012, when it bought the remaining shares from SIX Group, and the T7 trading system has run since 2013.

Eurex describes itself on its about page as a derivatives exchange, a repo platform and, with Eurex Clearing, a central counterparty. The three legal entities are Eurex Frankfurt AG, Eurex Clearing AG and Eurex Repo GmbH. Products include interest rate futures, equity and index options and futures, dividend and volatility products, crypto derivatives and commodity derivatives.

A central counterparty becomes the buyer to every seller and the seller to every buyer, so a trader carries the risk of the clearing house and no longer the risk of the firm on the other side. Eurex Clearing does this for trades on Eurex, on Eurex Repo and on the Frankfurt Stock Exchange. The answer What is a clearing house? explains margin and default funds.

Eurex Clearing AG is a credit institution under the German Banking Act, supervised by BaFin. According to its licensing page it was authorized as a central counterparty under EMIR on April 10, 2014, has been registered with the US Commodity Futures Trading Commission as a derivatives clearing organization since February 1, 2016, and has been recognized by the Bank of England under UK EMIR since July 26, 2023.

After Brexit much of the clearing of euro interest rate swaps stayed in London. The EU answered with EMIR 3 and its active account requirement: EU firms subject to the clearing obligation must hold an active account at an EU central counterparty and clear a representative share of certain derivatives there. According to Deloitte's summary, the classes in scope are OTC interest rate derivatives in euro and Polish zloty and short-term interest rate derivatives in euro, and firms below 6 billion euros of outstanding notional are exempt. ESMA set out the operational conditions in its final report.

For Eurex Clearing in Frankfurt this rule matters directly. The city had already gained from Brexit on the banking side: Goldman Sachs, Morgan Stanley, Citibank and UBS set up their EU hubs there, The Local reported.

Eurex lists futures and options on the FTSE Bitcoin and FTSE Ethereum indices, including nano futures at a hundredth of a bitcoin, and Eurex Clearing clears them. Eurex Clearing also launched a service that moves collateral on a distributed ledger with the technology firm HQLAX. The page on Deutsche Börse in crypto and digital assets has the details.

Traders, quants, risk managers and the technology teams of banks and trading firms meet at Finance Loop events in Frankfurt. Finance Loop works with Finteda, a practitioner network that began as a Frankfurt meetup for fintech builders, quants and data engineers. The pages on trading in Frankfurt and quant finance in Frankfurt cover the trading side of the city.

Eurex is the derivatives exchange of Deutsche Börse Group in Frankfurt, formed in 1998 from the German DTB and the Swiss SOFFEX. It lists futures and options on interest rates, equities, indices, dividends, volatility, commodities and crypto assets.

Eurex Clearing AG is the central counterparty of Deutsche Börse Group. It clears trades on Eurex, Eurex Repo and the Frankfurt Stock Exchange, collects margin from its clearing members and stands between buyer and seller until settlement.

Eurex Repo GmbH runs a trading platform for repurchase agreements, in which one party sells securities and agrees to buy them back later. Banks use repo to borrow cash against collateral or to borrow specific securities, and Eurex Clearing clears the trades.

BaFin is the primary supervisor, as Eurex Clearing AG is a German credit institution. Under EMIR a college of supervisors coordinated by ESMA takes part, and authorities in the United States, the United Kingdom and other countries have recognized or registered it.