Cash equity trades executed on the London Stock Exchange (LSE) will soon be cleared on EuroCCP as well as existing clearers SIX x-clear and LSE-owned LCH.Clearnet.
EuroCCP is the largest equities central counterparty (CCP) in Europe, clearing for 14 trading venues across the region. Last month, EuroCCP became the first CCP to be authorised under the European market infrastructure regulation.
The deal is subject to regulatory approvals and finalisation of legal, connectivity and operational arrangements, but an interoperability framework is already in place between EuroCCP, SIX x-clear and LCH.Clearnet.
Once live, firms using EuroCCP to clear UK equities trades executed on Aquis, BATS Chi-X, Equiduct, GETMatched, Goldman Sachs’ Sigma-X, SmartPool, Turquoise and UBS MTF will be able to save at least 50% on settlement costs by directing LSE trades to EuroCCP, the clearing house said. Through cross-platform netting by EuroCCP, all trades in the same UK stock, regardless of where they are executed, can be netted with LSE trades into a single settlement obligation.
“Many market participants have been waiting to have more choice in where they clear trades executed on London Stock Exchange. The addition of EuroCCP to the central counterparties already available will bring the benefits of more competition together with reduced costs,” said Diana Chan, CEO of EuroCCP.
Cross-platform netting of UK equities by CCPs has been possible since 2013 for trades executed on multilateral trading facilities and it is expected that LSE trades can also be cross-platform netted starting in Q3 2014.
EuroCCP was formed by the merger of Netherlands-based European Multilateral Clearing Facility and UK-headquartered European Central Counterparty. The company is equally owned by BATS Chi-x Europe, NASDAQ OMX, ABN AMRO Clearing Bank and The Depository Trust & Clearing Corporation.