European trading platform BATS Europe’s decision to replace European Multilateral Clearing Facility (EMCF) with UK clearing house LCH.Clearnet Ltd for UK and Swiss stocks could prompt EMCF to speed up its interoperability work, according to CEO Jan Booij.
EMCF expects to be interoperable with Swiss central counterparty (CCP) SIX x-clear by the summer, but the loss of business from BATS may accelerate its plans. “This could be a real push for EMCF to start on the next projects earlier,” Booij told theTRADEnews.com. “The aim was to start with x-clear and come up with a framework that would facilitate interoperability discussions with other CCPs. However, the BATS deal might mean we need to do something on a timeframe we didn’t expect.”
Booij said EMCF would make a number of strategic announcements “in a week or two”.
According to sources familiar with the matter, BATS Europe decided to replace EMCF to encourage the CCP to interoperate with LCH.Clearnet. TheTRADEnews.com understands that EMCF was reluctant to cooperate with LCH before securing access to trade flows from the London Stock Exchange, for which LCH.Clearnet Ltd is the principal CCP.
Booij said EMCF is committed to CCP competition in Europe and would not refuse to interoperate with other CCPs. But he stressed the need for give and take in interoperability deals. “It is not real competition if you open your doors to your markets and you can’t get any access to the markets of the other CCP,” he said. “We enter contracts with other CCPs from the point of view that there will be reciprocity, but we need to have some consensus that there will be access to other markets for EMCF. It is not a good idea commercially to offer one-way interoperability.”
BATS’ decision to use LCH was one of a string of new CCP deals announced last week. LCH.Clearnet Ltd also won mandates to clear for pan-European multilateral trading facilities Turquoise and NYSE Arca Europe, and has signed a memorandum of understanding to clear for Chi-X Europe. Turquoise is also planning to add SIX x-clear as a third clearer in addition to LCH and its existing post-trade partner EuroCCP. At the beginning of this week, exchange group Nasdaq OMX Europe announced its intention to use SIX x-clear and EuroCCP in addition to EMCF for its new Nordic CCP facility, scheduled for launch on 9 October.
LCH.Clearnet Ltd is the UK division of the LCH.Clearnet group. The French unit, LCH.Clearnet SA, is the CCP for NYSE Euronext’s European exchanges.