Is that what he meant?

There was an intriguing reference in the FT report of Reto Francioni’s remarks at the Deutsche Borse shareholder meeting. According to the FT, he referred to the “progressive introduction” of Eurex Clearing across the whole group and extension of risk management to all cash and derivatives markets. “A global clearing infrastructure will be formed which will significantly enhance risk management and efficiency in the use of capital for our customers.”

Taken literally, this seems to imply that Eurex Clearing would be introduced as the clearing house not just across all the group’s European markets (as everyone expects) but also for the NYSE in the USA. If this is indeed what he meant, then it is a very significant proposal, as it implies that the ambition is to create an integrated trans-Atlantic exchange group supported by a single clearing house.

However, the challenges in the way of this ambition are also huge. Not just the regulatory and legal challenges of creating a clearing house that can operate across European and US jurisdictions. Even greater would be the challenge of dislodging DTCC from its role as central counterparty for the NYSE. This is a role that is deeply hardwired into the US market. Dislodging DTCC would mean breaking up the common post-trade infrastructure which supports vigorous competition between US equity trading platforms. That may be the idea, of course.

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