Can EU CCPs gain meaningful euro swap clearing share before the 2028 UK equivalence deadline?

The European Union is intensifying efforts to shift more euro-denominated interest rate swap clearing onshore as the clock ticks toward the end of the UK’s equivalence period in June 2028. Under EMIR 3, European banks and asset managers are required to maintain “active accounts” with EU-based central counterparties (CCPs), a move designed to reduce overreliance on London’s LCH, which currently dominates the euro swaps market. But despite policy momentum, recent clearing data suggests that EU CCPs still face an uphill battle.

What are the current euro swap clearing market share trends ahead of the 2028 equivalence deadline?

As of Q1 2025, LCH SwapClear remains the dominant clearing venue for euro-denominated interest rate swaps, clearing approximately 92.9% of notional volume. Frankfurt-based Eurex has managed to grow its share from under 5% to 6.9% over the past 12 months, but other EU CCPs—including Euronext Clearing and BME Clearing—account for a negligible share.

These figures highlight the scale of the challenge facing EU CCPs. Network effects, longstanding client relationships, and LCH’s deep liquidity pool make London’s dominance hard to dislodge. The European Commission’s extension of equivalence through mid-2028 gives markets time, but thus far the shift has been incremental rather than structural.

Eurex has led the EU effort, offering clearing incentives and expanding its product suite. Still, most trading desks and swap dealers continue to prefer the operational familiarity and risk-management sophistication of LCH.

Why does this race for clearing share matter strategically?

The euro swap market clears an estimated €100–200 trillion in notional volume annually—making it one of the largest and most systemically important financial markets in the world. Clearing concentration at a non-EU venue exposes the European financial system to regulatory and operational risk, especially if UK equivalence were to be withdrawn abruptly.

EU regulators argue that relocating clearing volume to the bloc would improve systemic oversight, reduce third-country dependencies, and allow for greater supervisory control over margin models and liquidity buffers. From a banking perspective, greater use of EU CCPs could also simplify regulatory capital treatment under the incoming Basel III and FRTB capital regimes.

Despite the long runway, European officials have publicly stated that relying on market forces alone may not be sufficient. Speaking in February 2024, one EU official described the “active account” requirement as “a first step,” but warned that “regulatory nudges may become regulatory mandates” if voluntary migration stalls.

What do market participants need to do to tip the scale by 2028?

Clearing houses like Eurex are already investing heavily in margin efficiency, operational tooling, and client incentives to attract volume. For trading desks and bank treasuries, migrating clearing flows requires updates to infrastructure, collateral workflows, and counterparty risk policies.

ESMA is expected to issue a final definition of “active account” later this year, clarifying whether it requires a certain threshold of volume, pricing functionality, or operational readiness. Banks that simply open nominal accounts without routing meaningful trades may still fall short of compliance.

In parallel, some market participants have begun testing small-ticket flows and novation cycles through EU CCPs, preparing for a gradual increase in scale. However, without critical mass, bid-offer spreads and collateral netting remain more favorable at LCH.

As the mid-2025 deadline for active account enforcement approaches, institutions must balance operational inertia with the rising likelihood of tighter regulatory guidance.

What could happen if EU CCPs fail to capture significant clearing volume by 2028?

By 2028, EU policymakers hope to have shifted enough swap clearing volume onshore to justify reducing or ending reliance on equivalence with the United Kingdom. But achieving even 10–20% share will require coordinated action across banks, dealers, infrastructure providers, and supervisors.

Failure to move the needle could leave the EU exposed to future political risks around access to LCH, or forced into a rushed migration under less favorable conditions. Conversely, a measured but material increase in clearing share could establish EU CCPs as credible long-term alternatives and reposition Frankfurt or Paris as viable post-trade hubs.

The next two years will reveal whether EMIR 3’s active account mandate can translate into actual market share—or whether London’s clearing dominance will remain entrenched, equivalence or not.