Two pan-European central counterparties (CCPs) – European Multilateral Clearing Facility (EMCF) and SIX x-clear – have signed a memorandum of understanding that will allow multilateral trading facilities (MTFs) to offer members a choice of clearing services.
Nasdaq OMX Europe, which recently bought a stake in EMCF, Chi-X Europe and BATS Europe, all currently use EMCF as their sole CCP.
SIX x-clear is owned by Swiss financial group SIX Group and currently acts as a CCP for SWX Europe and SWX Swiss Exchange. It also started clearing for the London Stock Exchange from December last year. EMCF is majority owned by Fortis, the Benelux-based bank, which was taken into state ownership by the Dutch government last year.
Chi-X Europe has said that it intends to introduce a “user choice” clearing model and become the first MTF to offer participants the ability to clear though multiple central counterparties. CEO Peter Randall told theTRADEnews, that interoperability would reduce overall clearing costs and lead to widespread benefits for the pan-European equities market.
“The clearing space is heating up and the resulting opportunities will benefit the whole trading community,” he said. “The buy-side will benefit from the greater security of having more than one CCP. This will in turn lead to a further focus on costs and other deliverables that could be passed on to buy-side firms in the form of lower charges and fees.”
The deal between SIX x-clear and EMCF is in line with the Access and Interoperability Guidelines within the European Code of Conduct, as signed by more than 50 organisations. Subject to regulatory approval, SIX x-clear and EMCF expect to implement the interoperable link by summer 2009.
Chi-X, Nasdaq OMX Europe and BATS Europe have all indicated that they intend to offer multiple clearers.
“Nasdaq OMX Europe is committed to interoperability and supporting development of this initiative across Europe,” said Charlotte Crosswell, president of Nasdaq OMX Europe. “It is an important structural change to increase competition and lower costs for investors and this was one of the reasons behind taking a 22% stake in EMCF. As soon as EMCF and SIX x-Clear can offer this significant market development, we will be delighted to offer it for our clients.”
“BATS Europe supports the EMCF / SIX x-clear interoperability initiative and is in the process of ensuring that its participants are able to benefit from it as soon as it is available,” added a spokesperson from BATS Europe.