Around 10 banks, including Deutsche Bank AG and UniCredit SpA, transferred some of their swaps trades to Frankfurt from London in May as part of their preparations for a worst-case Brexit scenario, Bloomberg News reported, citing people familiar with the matter.
Should the U.K. leave the EU without a deal, mainland European banks would be unable to keep their swaps with London Stock Exchange Group PLC unit LCH Ltd. beginning April 2020 unless the European Commission further extends the London-based clearinghouse's ability to serve lenders, the news agency noted.
The transfer took place as part of a switching exercise under which the banks closed existing U.K. swap positions and opened equivalent ones in Germany, the sources said. BGC Partners Inc. unit Capitalab, which managed the exercise, reportedly plans to repeat it once a month.
Some of the 10 lenders, including JPMorgan Chase & Co., Commerzbank AG and Bayerische Landesbank AöR, acted as market makers in the exercise and traded with the banks to generate revenue, according to the report. Bayerische Landesbank also moved some swaps to Frankfurt, Bloomberg said.