Eurex vs LCH.Clearnet: clash of the titans

Eurex is trying to steal business from the market’s dominant interest rate swap clearer, LCH.Clearnet. The pitch: it is less risky and therefore cheaper in terms of capital and margin. Some dealers are starting to pay attention, but others say recent rule changes have undermined the argument. By Cécile Sourbes

Over the course of 21 months starting in January 1997, Eurex did something extraordinary. It poached Europe's biggest interest rate futures market – the Bund contract – from London-based Liffe, which began that period with 65% of the volume and ended with zero.

Now, the Frankfurt-based exchange and clearing house is hoping to repeat the trick in the over-the-counter derivatives market, with the intended target being another London-based incumbent – LCH.Clearnet's SwapClear. As with the Bund