SEEN from the continent, it just isn’t right. LCH, a firm mostly owned by the London Stock Exchange (LSE), dominates the clearing of interest-rate derivatives. Each day it clears $3.4trn-worth, counting both sides of a trade. (The simplest variety is a swap of fixed and floating rates, allowing counterparties to reduce or increase their exposure to changes in rates.) In euro-denominated derivatives, the biggest category after dollars, LCH’s market share comfortably exceeds 90%, according to Clarus Financial Technology, a research firm.
Eurex, the derivatives arm of Deutsche Börse, owner of the Frankfurt Stock Exchange, wants to change that. So do European Union politicians and regulators, once Britain quits the EU. On November 20th Eurex’s clearing division said that so far around 20 banks, including lots of heavyweights, had joined a “partnership programme” to boost its interest-rate business. (The most notable absentees are Goldman Sachs and two big French banks, BNP Paribas and Société Générale.)
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