The battle for the Euribor heated up yesterday with Eurex announcing via member circular a fee waiver for its Euribor contract.  With ICE the dominant player in Euribor and NLX attempting to build a foothold, Eurex’s latest move appears to attempt to take advantage of a changing structural landscape.

Eurex has been playing up the role of portfolio margining offering PRISMA in recent weeks.  

With banks looking at higher capital requirements, capital efficiency is the buzz phrase of the day.  Eurex is looking to build on the liquidity of its yield curve products, and this new fee waiver, to attract volume to its six year old Euribor contract.

Eurex’s PRISMA portfolio based margining system is required to be deployed for all exchange traded derivatives on Eurex by the end of 2015.  As general clearing members of Eurex transition off the risk based model, the value of clearing at Eurex, ICE or NLX, could change.  It looks like Eurex is betting GCMs will be moving to PRISMA sooner than later.

Matthew Scharpf, Vice President of Business Development for Fixed Income products in Chicago said this about the value of the fee waiver, “No other exchange has all the margin efficiencies and liquidity across the yield curve in these products, as Eurex does.”

We shall see if customers agree.  

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