Euro Millennium, the European dark pool owned by trading technology firm NYFIX, will be the first multilateral trading facility (MTF) to use BNP Paribas Securities Services’ new MTF-oriented post-trade facility.
BNP Paribas has launched an integrated post-trade service, called the Hybrid Model, for its buy- and sell-side clients, which also includes services for the MTFs themselves.
“The Hybrid Model enables an MTF to provide agency onward trading for its participants as well as enabling the MTFs to operate against buy-side and sell-side trading participants,” Jason Nabi, UK head of financial intermediary solutions, told theTRADEnews.com.
He added, “NYFIX Euro Millennium will be the first MTF to offer both buy-side and sell-side participants the ability to match on its order book and offer onward routing of residual orders with the full benefit of the Hybrid Model.”
Under the Hybrid Model, BNP Paribas acts as a clearing agent for brokers trading on multiple MTFs, partnering with the relevant central counterparties. The bank will also act as the settlement counterparty for buy-side participants trading directly on MTFs, and as the settlement agent for MTFs themselves. Buy-side firms would traditionally access a settlement counterparty through their executing broker.
In addition, where MTFs route unfilled orders on to other venues – effectively acting as agency brokers – BNP Paribas provides them with records and regulatory reporting to satisfy the requirements of the UK Financial Services Authority.
The first clearer BNP Paribas has partnered with for the Hybrid Model is Swiss firm SIX x-clear. The firm, which belongs to the same group as Swiss stock exchange SWX, was appointed as the clearing provider for Euro Millennium in September this year. NYFIX announced back in November 2007 that BNP Paribas would be providing post-trade services to Euro Millennium.
BNP Paribas’
hybrid model was designed to cater for the changing MTF business models, according to Nabi. “MTFs are opening up to both buy- and sell-side users. That creates new post-trade challenges for the industry and the MTFs,” he said. “Now, in most cases, they are also adding onward routing of residual order flow to other venues, effectively acting in an agency broker capacity. That also creates a new post-trade dimension.”