Five investment banks have announced their intention to use EuroCCP, the pan-European central counterparty (CCP) owned by US post-trade utility DTCC, as their preferred clearer in interoperability arrangements.
Bank of America Merrill Lynch, Credit Suisse, Morgan Stanley and Nomura have selected EuroCCP as their preferred clearer on BATS Europe, the pan-European multilateral trading facility (MTF), while Citi, via its Global Transaction Services third-party clearing business, has opted for EuroCCP for clearing trades on UBS MTF, the dark pool operated by Swiss bank UBS.
BATS Europe's preferred interoperable clearing service, which launched on 29 July, gives the MTF's members the choice of sending their trades to Anglo-French clearer LCH.Clearnet, Swiss clearer SIX x-clear or EuroCCP. To opt in, trading participants on both sides of the trade must elect to use one of the three interoperating clearers. If one or both counterparties do not choose to use the service, the trade will be sent to EMCF, BATS Europe's incumbent clearer, which will act as the default CCP.
UBS MTF, which uses SIX x-clear as its default CCP, began offering interoperability with EuroCCP on 22 July.
In conjunction with the launch of interoperability, EuroCCP announced a new fee structure that came into force on 1 August. The new tariff waives clearing fees for clients that trade over 230,000 sides per day. According to EuroCCP, this translates into a daily fee cap of €4,300 for members that meet the threshold.
“We are hoping the success of these initiatives will encourage other trading venues to follow suit in implementing interoperability. If there is wider adoption of interoperability across more trading venues, the European equities trading landscape will be transformed and market participants will truly benefit from greater competition and lower costs,” commented Diana Chan, CEO of EuroCCP.