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Spotlight on buy side clients

Spotlight on buy side clients

Eurex Repo, member of Deutsche Börse Group, has expanded its existing, successful interbank markets to address buy side clients. In contrast to the anonymous interbank markets, the customized buy side trading licenses offer bilateral trading. This allows banks and their buy side clients to continue their existing business relationships.

Select Invest clients can act as net cash providers to banks quickly and easily, benefiting from the advantages of trading through a clearing house. This specific license offers restricted trading opportunities and therefore enables simplified access conditions for buy side customers.

Select Finance, another joint initiative of Eurex Repo and Eurex Clearing, will provide access to secured funding (GC Pooling) and securities financing (Repo and SecLend Market) in one single trading and clearing permission. Select Finance clients will have direct access to Eurex Clearing and need to fulfil all admission requirements. This can be achieved by signing an agreement with a clearing agent who will provide transaction, cash and collateral management services.

Key characteristics of the different buy side access models

Buy side clients are not the only ones to benefit from these trading licenses. If a bank concludes a cleared repo transaction with e.g. a corporate, the bank lowers significantly its capital costs by decreased risk weighted assets (2% compared to 20 – 100%). In addition, the bank can profit from the central counterparty’s balance sheet netting possibilities if it concludes further reverse repo transactions in the GC Pooling interbank market because both transactions are concluded against the same counterparty. The reduced capital requirements driven by exposure netting, have positive effects on the leverage ratio and Net Stable Funding Ratio (NSFR).

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