BATS Europe, the pan-European multilateral trading facility (MTF) operated by US-based exchange group BATS Global Markets, will start trading Spanish stocks from 11 December.
BATS will become the fourth MTF to trade all constituents of the IBEX 35 blue chip index, following Chi-X Europe, Turquoise, NYSE Arca Europe and Nasdaq OMX Europe.
Spanish trading on BATS Europe will be cleared using pan-European central counterparty European Multilateral Clearing Facility and stocks will be traded using a similar solution to other MTFs, which have been required to find workarounds to clear trades in Spain.
Settlement of a trade by national central securities depository (CSD) Iberclear requires an identification number that can only be generated via one of the country’s exchanges in Madrid, Barcelona, Bilbao and Valencia. To circumvent this, MTFs’ central counterparties (CCPs) have been aggregating their Spanish trades after the end of daily trading then sending them to a local broker, which then crosses the trades with itself in the closing auction to generate the required identification number.
However, changes to the settlement rules, which will enable trading venues’ CCPs to forge direct relationships with Iberclear and receive the required identification number directly, are expected by mid-2010.
Chi-X Europe was the first MTF to start trading in Spain, launching its offering in December 2008. Turquoise and Nasdaq OMX Europe followed suit in February 2009.