Jeffrey Tessler is a busy man these days as the person overseeing a recently restructured unit at Deutsche Boerse called “Customers, Products & Core Markets.” The new division rolls together Eurex, Eurex Clearing and Clearstream, the collateral management and settlement business.
“We had it separated, so by bringing it together and walking into a client, we can talk about what is most important to them,” said Tessler, at the FIA IDX conference in London. “Obviously, clearing is an important aspect of their business and also the collateral management and collateral efficiency, and collateral optimization. How do we bring it all together? “
With the new business model, Tessler said Deutsche Boerse is more aligned with customers trading across multiple asset classes on multiple markets. Given the European regulatory overhaul that now dictates new rules on everything from capital requirements to which products need to be exchange traded, cleared and reported, the move is aimed at addressing new efficient solutions for end users.
The reorganization, announced in November 2015, has taken some time to be sorted out within the organization but is now effectively set. The new model also fits nicely with the Deutsche Boerse’s bid for the London Stock Exchange Group. Should the deal receive shareholder and regulatory approvals, the combined exchange would feature a broad spectrum of exchange traded derivatives (ETD), OTC services as well as OTC and exchange traded clearing, settlement and custodial services. The total market cap of the combined entity would be around $30 billion, putting it just behind the top exchange by market cap, CME Group.
“The role of the exchange has changed over the past decade,” Tessler said. “One of the things that LSE and Deutsche Boerse have in common, is that they have developed quite significant presence in the post-trade world. But what the benefit is, is that there is not a lot of overlap. They are big in the OTC space, we’re big in the ETD space. So I look at it and think about the opportunities to now expand the product range, not just being highly focused on ETD, and be more diversified on OTC, because that is the way our clients trade.”