Nasdaq Clearing establishes direct clearing client model

New model introduces direct relationship between client and CCP for cost efficiency.

Nasdaq Clearing has confirmed the launch of a direct clearing client model aimed at minimising client driven costs and increasing clearing member default protection. 

The exchange operator said the model changes the legal relationship from client clearing member into client-CCP, meaning the client is responsible for initial margin and variation.

The clearing agent will oversee the entire transaction chain in the new model, including position management, collateral management and settlement.

Julia Haglind, president of Nasdaq Clearing, explained the management of client risks and costs related to client clearing have become increasingly important for market participants following the financial crisis.

“With a transforming regulatory landscape as well as changing client needs, we see an opportunity not just to follow but to take the lead in shaping the financial markets of tomorrow,” she said.

Nasdaq added more than 100 clients are ready to transition to the new model and the former direct pledge model will be phased out during a three-month period as of today.