BME provides further details of post-trade services development

Spanish Exchange Group, Bolsas y Mercados Españoles (BME), has detailed its new securities services unit.

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Spanish Exchange Group, Bolsas y Mercados Españoles (BME), has detailed its new securities services unit.

The unit, due in October this year, is part of an overhaul of the group’s post-trade functions, to reform the registration, clearing and settlement system and to connect to TARGET2 Securities (T2S). It will offer securities services including custody and settlement, corporate actions and tax reclamations, taking on local providers BNP Paribas Securities Services and Citi.

The project includes an overhaul the clearing framework for equities trades. Its Iberclear subsidiary is the natural counterparty for derivatives trades. However, BME general manager Javier Hernani said the market needed a proper clearing framework to address the risk of all equity trades. It has also begun to clear interest rate swaps.

Speaking at a press briefing on the overhaul of post-trade services, Hernani added: “It will compliment the value chain and lead to the beginning of new opportunities in T2S. Today the level of netting is lower. With the introduction of overhauled clearing in October we will begin to charge clearing and settlement fees. With the change in clearing financial institutions will be able to net their trades in T2S.”

The overhaul involves new software, requiring substantial investment from the banks to connect.

Hernani added that the overhaul is a natural pull of post trade services in Spain into one company. This approach will heap further criticism on the group for its monopolistic ownership post trade services. BME also has a 50% stake in trade repository Regis-TR.

Hernani confirmed the group would co-operate with other institutions, including the launch of a market data venture Mexico. Hernani added there are “opportunities” in Chile and in Columbia the group is looking at the sale of post trade reporting software to Columbian banks. “Regulation will follow in LatAm where you will need a CCP,” he said.