Clearing houses LCH.Clearnet Ltd and European Multilateral Clearing Facility (EMCF) have agreed to interoperate by 2 November this year, initially for UK and Swiss equity trades. The decision to forge the link was first announced in May.
The deal will allow multilateral trading facilities (MTFs) BATS Europe and Chi-X Europe, which both currently use EMCF as their main central counterparty, to give their members a choice of clearer when trading Swiss and UK stocks.
Other trading venues have expressed an interest in offering a choice between the two clearers, according to Jan Booij, EMCF’s CEO, who said the open nature of the arrangement makes it simple to add more venues and markets.
In addition to BATS Europe and Chi-X Europe, EMCF currently clears for Nasdaq OMX Europe and Quote MTF. It will also become the CCP for exchange group Nasdaq OMX’s Nordic bourses and Nordic MTF Burgundy when their respective clearing services go live on 9 October.
LCH.Clearnet Ltd, the UK subsidiary of the LCH.Clearnet group, is the main CCP for the London Stock Exchange.
“We have made excellent progress since we first announced our plans to interoperate with EMCF only four months ago,” said Wayne Eagle, director, equity services at LCH.Clearnet, in a statement. “Our aim is to deliver the benefits of clearing interoperability as soon as possible and in signing this agreement, we are another step closer.”
Lack of CCP interoperability is seen as a major barrier to true trading venue competition in Europe. The LCH-EMCF link was one of a raft of interoperability deals announced earlier this year in the wake of the European Commission’s Code of Conduct on Clearing and Settlement.