FRANKFURT/LONDON (Reuters) - Deutsche Bank (DBKGn.DE) has moved the clearing of a “large part” of new euro-denominated derivatives trades from London to Frankfurt, as financial firms ramp up their Brexit preparations.
The shift by Germany’s largest bank, which was confirmed by a spokesman on Monday, is a boost to Deutsche Boerse’s (DB1Gn.DE) efforts to gain ground from London in the euro clearing market. This ensures a deal completes even if one side of a trade goes bust, as Britain exits the European Union.
London Stock Exchange’s (LSE.L) LCH division has long dominated clearing of euro-denominated derivatives like interest rate swaps, which are used by companies to cover themselves against unexpected moves in borrowing costs.
The worry for the City of London is that if chunks of clearing move elsewhere, other activities like trading and jobs could follow, eating away at Britain’s biggest economic sector.
LSE declined to comment on Deutsche Bank’s largely symbolic move, first reported by the Financial Times, which was widely expected given that its base is in Frankfurt and it is moving other activities there due to Brexit.
The Deutsche Bank spokesman said no jobs were being transferred and that the bank was effectively pushing a different button to route the clearing to Eurex, Deutsche Boerse’s clearing division, rather than LCH.
International banks with European bases in London have been opening hubs in the EU to avoid Brexit disrupting business.
Meanwhile trading firm Jane Street, one of the largest players in exchange-traded funds, said on Monday it had opened an office in Amsterdam, giving it a location from which to serve EU clients when Britian leaves the bloc. [L5N1UQ402]
The Dutch capital, with high-speed digital infrastructure in the heart of Western Europe, has
