Although MiFID focuses primarily on trade execution services, Willy Van Stappen of Equiduct believes that new execution platforms need to take full account of the reality of the current clearing and settlement (C&S) environment if they are to provide a competitive end-to-end trading service.
In the latest in the series of Equiduct-sponsored white papers written by industry experts, Willy Van Stappen sets out the most efficient C&S solutions for cross-border trades, and stresses the need for market participants to be able to select the most appropriate C&S location, whether in their capacity as an intermediary or as an execution venue such as an SI.
The white paper is aimed at helping investment firms identify the most appropriate and efficient C&S model for their business. The paper looks at three key scenarios: where a central counterparty is available, where no central counterparty is available, and the requirements for multilateral trading facilities or regulated markets partnering with a central counterparty or a custodian acting as a settlement agent.
For each scenario, Willy Van Stappen identifies the fundamental C&S requirements including liquidity, connectivity, a standard settlement model, minimal intermediaries processing, fungibility of stock and fees set at as low a rate as possible.
"The white paper written by Willy states clearly how under articles 35 and 46 of the MiFID documentation investment firms must be able to freely choose the most appropriate C&S provider irrespective of their nationality," comments Equiduct CEO, Bob Fuller. "At Equiduct we believe strongly that there is very little point in building the best execution venue only to end up providing a poor service to customers by making the wrong C&S decisions. That is why Equiduct, as a pan- European regulated market has been designed from the outset to be completely independent of C&S services, allowing our participants to select the solution that works best for them."
"When we first outlined this paper with Willy Van Stappen, he was as independent as all the other authors in our series of MiFID related white papers, however we should declare that since our first discussions he has joined Equiduct as our Chief Operating Officer, "adds Fuller. "We believe his deep expertise in this sector still makes him a valuable addition to our MiFID series, and we are delighted that he will have an opportunity to turn his vision of C&S in a post-MiFID world into practice."