A seemingly innocuous news item from my good friend John Detrixhe at Bloomberg got us all chatting here at Fidessa Towers this morning. The story was about how Eurex Clearing was going to allow large buy-sides direct membership of its derivatives clearing house. The rationale for this is entirely logical as today’s regulations treat client capital as a risk asset and therefore subject to capital ratios. In a capital constrained world then, surely Deutsche Börse is doing the FCM community a favour?
Those of us who have been in the industry a while, however, remember with misty-eyed reverie how the whole industry used to work. Back then, the entire FCM business model was underpinned by the spread between the capital you took in as margin and what you paid out to clearing houses, and at the same time by making money on the difference. Zero and even negative interest rates shoot the first hole in the this model and now Eurex looks to torpedo it below the waterline with this latest move....MORE
Thursday, March 31, 2016
"Has the futures industry just been Uberised?"
From Fidessa's Fragmentation Index: