Eurex welcomes Swiss Life as direct clearing member

Press release
Article tags:
  • Clearing

Eurex Clearing’s ISA Direct – a direct clearing membership for the buy side – gains traction: Swiss Life Asset Managers is the first buy-side client using the central counterparty’s ISA Direct service for OTC Interest Rate Derivatives with ABN AMRO Clearing acting as clearing agent. With this model, Eurex addresses changes in the regulatory landscape and contributes to the safety, robustness and efficiency of the overall market.

"We are committed to bringing innovative clearing services to our clients. The ISA Direct set up offers capital, operational and risk efficiencies for all parties including novel collateral management solutions."

Alexander Jacobs, Head of OTC Clearing

ISA Direct model

Eurex Clearing developed ISA Direct to support both the sell- and the buy side by addressing key concerns of the industry around the cost of clearing and the concentration of risk. Increased capital requirements for banks have resulted in higher client fees, wider spreads or even service reductions in the clearing space. In addition, risk concentration in client clearing remains a challenge for systemic stability in times of crisis.

Traditionally, buy-side firms have had an indirect connection to clearing houses, using clearing brokers as intermediaries. Within the ISA Direct framework, these intermediaries act as clearing agents who cover the default management obligations including the default fund contribution and optionally offer certain clearing services such as transaction, cash or collateral management. ISA Direct members face Eurex Clearing directly as counterpart for their positions whilst maintaining legal and beneficial ownership of any securities collateral provided.

Jan Grunow, Head of Operations at Swiss Life Asset Managers: "By being able to directly connect to Eurex Clearing, our concerns about credit risk and the portability of our assets are much better addressed. The ISA Direct model alleviates many of our concerns and helps us to meet the regulatory requirement of central clearing."

ABN AMRO Clearing is a leading clearing provider with a proven track record of partnering with its clients and supporting innovative solutions. The lower balance sheet impact involved with the ISA Direct offering is perceived by ABN AMRO Clearing as a major advantage that allows to further expand its central clearing services to well established buy-side clients.

"We are delighted to partner with Swiss Life," said Alexander Jacobs, Head of OTC Clearing at ABN AMRO Clearing. "We are committed to bringing innovative clearing services to our clients. The ISA Direct set up offers capital, operational and risk efficiencies for all parties including novel collateral management solutions. "

The ISA Direct model is currently offered for Eurex Clearing’s interest rate swaps and repo transactions. Philip Simons, Eurex’s Head of Fixed Income, Funding & Financing Sales. "We welcome Swiss Life on board and thank ABN AMRO Clearing for its continued support. It confirms the value proposition of the ISA Direct model and we look forward to working with market participants to accelerate the adoption of this innovative service."