Britain has left the European Union and access to the bloc under transition arrangements ends on Dec. 31, with talks on a free-trade agreement continuing.

Brussels is allowing derivatives clearing houses in London to continue serving EU investors for a further 18 months to give banks time to shift billions of euros in positions from the London Stock Exchange's LCH unit that clears the bulk of euro denominated interest rate swaps.

Deutsche Boerse's Eurex Clearing had already introduced an incentive program to encourage banks to move swaps from LCH to Eurex in Frankfurt, and said on Tuesday it would be strengthened and extended to June 2021.

"With the expansion of our central counterparty Switch Incentive Program, we want to make it easier for market participants to comply with the demands of the regulators and transfer swap business into the European Union," Matthias Graulich, a member of Eurex Clearing's executive board, said in a statement.

A complete waiver in booking fees on portfolio transfers would mean a Eurex clearing member realising an "economic benefit" of up to 1.5 million euros (1.3 million pounds) by moving a 250 billion euro swaps portfolio from London to Frankfurt, Eurex said.

LCH declined to comment on Eurex's announcement.

More than 500 banks and buy-side firms have been "on-boarded" for swaps clearing, Eurex said.

"Market share in euro denominated OTC interest rate derivatives in terms of outstanding volume has been continuously growing and currently stands at roughly 19%," it added.

LCH Group CEO Daniel Maguire told Reuters in September that forcing banks to shift euro clearing from the City of London would prompt a backlash among cost-consious banks.

LCH's market share has hardly budged since Britain voted in 2016 to leave the EU, Maguire said.

(Reporting by Huw Jones; Editing by Edmund Blair and Louise Heavens)

By Huw Jones