Equities clearing house European Multilateral Clearing Facility (EMCF) has appointed Deutsche Bank as its settlement agent for central and eastern Europe ahead of pan-European trading platform Nasdaq OMX Europe’s expansion into the region.
Deutsche Bank will acts as EMCF’s settlement agent in the Czech, Hungarian and Polish markets following Nasdaq OMX Europe’s announcement last September that it planned to start trading blue-chip equities listed on the Budapest, Warsaw and Prague stock exchanges in Q1 2010. The multilateral trading facility (MTF) appointed EMCF, which already clears its trades in the other markets where it operates, as its central counterparty for central and Eastern Europe.
“The launch of CCP services will significantly mitigate counterparty risks in the region and provide low settlement fees, thanks to the netting capability provided by EMCF,” said Jan Booij, CEO of EMCF, in a statement.
Nasdaq OMX Europe is so far the only displayed pan-European MTF to announce plans to trade central and eastern European stocks. EMCF also clears for rival displayed platforms Chi-X Europe, BATS Europe and Quote MTF.
EMCF was among industry participants in a recent hearing before the Public Finance Committee of the Polish Parliament that resulted in proposed changes to stamp duty. If passed, the changes will exclude international companies from duties on most equity trades.
EMCF will offer CCP services in central and eastern Europe in first quarter of 2010, subject to regulatory approval and implementation of the new Polish tax laws.
Separately, EMCF is to provide settlement obligation messaging to its clearing participants via financial messaging cooperative SWIFT. According to EMCF, using SWIFT’s standardised messaging format will allow the clearer to conform to European market-practice harmonisation initiatives and will reduce operational risks and costs.
From 26 March, SWIFT and EMCF customers will be able to reuse their existing SWIFT connection to receive the settlement obligations for EMCF’s central counterparty cash equities clearing.
After the netting process, EMCF will mirror the settlement instructions addressed to the domestic central securities depositories to both general and direct clearing participants.