Banks welcome Eurex's plans for an EU liquidity pool for Euro STIRs

Eurex has today announced it plans to expand its Partnership Program (link) for interest rate swaps to include STIR derivatives.

It writes, “By combining an EU-based liquidity pool for STIR derivatives with its leading long-term interest rate (LTIR) derivatives segment and its OTC interest rate offering, Eurex further enhances margin efficiency. With this market-led solution to create an alternative liquidity pool for STIR derivatives, Eurex supports the EU’s systemic risk management and strategic autonomy agenda.” The plan includes 3m €STR futures as well as EURIBORs and the intention is to go live in 2023 Q4.

Furthermore, Eurex highlights the EU’s proposals “to reduce over-reliance on certain third-country CCPs.” It writes, “In addition to euro interest rate swaps and euro credit default swaps, euro STIR derivatives clearing has been identified by ESMA as being of substantial systemic importance for the EU’s financial stability. It therefore falls within the scope of measures proposed by the European Commission in December 2022 to reduce over-reliance on certain third country CCPs.”

Market participants can register their interest to join the program with BNPP, DB, GS, JPM and LBBW among the banks that have “already expressed an early interest to join”.

Guillaume Bioche, Head of European rates automated market-making at BNP Paribas described the move as logical and said that, "we can expect benefits and efficiencies across the EUR interest rate curve and across listed and OTC markets.” 

David Feldmann, Head of Markets D/A/CH at Deutsche Bank, was "very excited" about the creation of an alternative liquidity pool for EURIBOR. 

Jan Scheffel, Co-Global Head of STIR Trading at Goldman Sachs, said that the bank was "happy to expand our long-standing partnership with Eurex into STIR futures.”

And Tom Prickett, Head of EMEA Rates Trading at JP Morgan noted that: “We have been an early supporter of the OTC interest rate swaps segment of the program. We are engaged on the upcoming extension to this successful program in the interests of promoting increased choice and competition.”