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At a glance: Eurex results in Q2 and in the first six months 2018

Release date: 01 Aug 2018 | Eurex Exchange

At a glance: Eurex results in Q2 and in the first six months 2018

In the Eurex segment (Financial Derivatives), Deutsche Börse Group reports on the development of the financial derivatives trading and clearing business at Eurex Exchange. The clearing volume of OTC interest rate swaps, one of the secular growth factors for Deutsche Börse Group, is reported as a separate item.

Eurex segment (Financial Derivatives): key indicators


Q2 2018

Whilst trading volumes of equity index derivatives clearly increased during the first quarter of 2018 due to higher equity markets volatility, it was trading in interest rate derivatives that markedly rose during the second quarter of 2018. Decisions taken by the Fed and the ECB provided important stimuli to trading in long-term interest rate derivatives because the market now expects increasing interest rates in the euro area over the medium term. Furthermore, Eurex derivatives on Italian BTPs generated record-level volumes in May 2018. The high volumes were generated amidst the events surrounding the formation of a new government in Italy – given Eurex’s broad product range of futures and options, investors were able to properly hedge their portfolios. Overall, the number of traded interest rate contracts increased by 18 per cent during the second quarter of 2018, and on 4 June Eurex achieved a new record volume of 10.5 million interest rate derivatives traded in a single day.
The increase in trading activity with single-equity derivatives was even greater (32 per cent) – and all major European derivatives exchanges recorded an increased flow of liquidity into single-equity transactions.

This was due, among other things, to the spill-over of the currently positive investment climate from the European stock exchanges onto the futures and options markets. Trading in equity index derivatives was 2 per cent behind the previous year, given another decline in equity markets volatility. The Eurex Clearing Partnership Programme picked up momentum: this was launched in October 2017 to create a liquid, EU 27-based alternative for the clearing of interest rate swaps denominated in euros. So far, 29 market participants from the US, the United Kingdom, Asia and Continental Europe have decided to participate in this programme. Clearing volumes in the interest rate derivatives segment booked during the second quarter of 2018 increased tenfold compared to the same period of the previous year. In fact, the outstanding nominal volume recorded in June 2018 was five times higher than in June 2017. Therefore, Eurex Clearing now serves about 8 per cent of the global euro-denominated interest rate derivatives market, based on the outstanding nominal volume of OTC interest rate derivatives denominated in euros and published on the websites of Eurex Clearing, LCH and CME (as at 30 June 2018).

Effective 1 April 2018, Eurex revoked the temporary reduction in handling fees for cash collateral provided by clients. Since then, Eurex has been charging fees of 20 basis points on cash collateral. Against this background, interest income, disclosed under the ‘Margin fees’ item within net revenue of the Eurex segment, increased considerably compared to the same period of the previous year.

First half of 2018

The financial derivatives segment generated double-digit growth rates during the first half of the year. During the first quarter of 2018, Eurex was able to generate growth with equity index derivatives thanks to increased market volatility, while during the second quarter of the year, revenue was boosted mainly by interest rate products. This confirms Eurex’s strategy to offer a diversified product range across all asset classes, thereby allowing the exchange to cater to the trading and hedging strategies of market participants considering different macroeconomic influencing factors.

 

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