LCH plans to switch from EONIA to ESTR for euro-denominated swap discounting in a single step next June. The clearing group’s SwapClear service will apply a flat version of the new rate with no additional spread. “Eurozone banks are already using this type of discount and we expect that they will continue doing so,” said Jan van der Velde, head of trading at Deutsche Boerse. A cash transfer to compensate for the difference will be paid by counterparts that benefit to those that lose out.
LCH plans to switch from EONIA to ESTR for euro-denominated swap discounting in a single step next June. The clearing group’s SwapClear service will apply a flat version of the new rate with no additional spread. The move will instantly impact the value of trades with a current notional value of €91tn. A cash transfer to compensate for the difference will be paid by counterparts that benefit to those that lose out.