NYSE Euronext’s planned multilateral trading facility (MTF), provisionally called Octopus, has chosen EuroCCP as its initial clearing provider from launch in November this year, but also plans to provide clients access to three more pan-European central counterparties (CCPs) in 2009.
The other three CCPs are Fortis’s European Multilateral Clearing Facility (EMCF) – now owned by the Dutch government – Anglo-French provider LCH.Clearnet and Swiss clearer SIX X-clear. The exchange said it will add the clearers once they have established the necessary interoperability. LCH.Clearnet provides clearing services to NYSE Euronext’s existing European exchanges in France, Netherlands, Belgium and Portugal. Both EuroCCP and LCH.Clearnet will provide clearing for NYSE Euronext’s SmartPool dark pool.
“We’re delighted to be the first exchange to offer freedom of clearing choice to customers trading on our new pan-European MTF,” said Cees Vermaas, executive director, European sales and head of the MTF project at NYSE Euronext, in a statement. “We believe all four clearing and settlement providers will work to implement links to each other to be ready to clear the full range of stocks from 14 European countries in the course of 2009. This will considerably enhance competition, delivering quality of service, reducing cost and lowering risk for our customers.”
He added that the move is in line with the EU Commissions Code of Conduct for Clearing and Settlement, which urges greater interoperability between post-trade providers across Europe.
Although NYSE Euronext claims it will be the first to offer a choice of clearers through its MTF platform, others are also planning to offer connectivity to multiple CCPs. Börse Berlin Equiduct Trading, a pan-European exchange scheduled for launch later this year, plans to use the existing clearing infrastructures in the markets where it trades, and may add pan-European clearers such as EuroCCP and EMCF if there is enough client demand. And on 24 September, the London Stock Exchange announced it is to start offering clearing services from SIX X-clear alongside those of its existing provider, LCH.Clearnet.
The Octopus MTF, which NYSE Euronext unveiled in early September, will offer central limit order book trading for European blue-chip shares that are not already offered on the exchange’s existing markets. As with other MTFs, Octopus will undergo a phased launch, where stocks will be added during Q4 2008 and Q1 2009. The first phase, which will begin trading in mid-November, will include German, Italian, Swedish, Norwegian and Finnish stocks.