The newly-launched European division of dark block trading platform Pipeline will offer clearing and settlement to both buy- and sell-side clients through BNP Paribas Securities Services and pan-European clearing house EuroCCP.
Under the arrangement, BNP Paribas will act as an intermediary between EuroCCP and traders on Pipeline who are not able to connect to the clearer directly – typically buy-side clients. Pipeline’s buy-side users will also be able to settle using BNP Paribas’ settlement account as though they were direct clients of the firm. BNP Paribas will assume the associated settlement risk – a so-called ‘model B’ arrangement. Pipeline said access to BNP Paribas’ AA-rated balance sheet allows users to mitigate counterparty risk.
Sell-side firms trading on Pipeline will be able to access EuroCCP directly as a central counterparty for their trades on Pipeline.
As well as reducing counterparty risk for both buy- and sell-side, Pipeline said the arrangement enables reduction of settlement costs because it allows the netting of trades executed on the platform.
“This unique new solution will provide risk reduction benefits to both buy and sell-side clients whether they directly use a CCP or not,” said Marcus Hooper, executive director of Pipeline in Europe, in a statement. “In these volatile market conditions where liquidity is more difficult to source and risk is a constant concern, we want to provide new and better solutions to clients. Offering this new hybrid model B/central counterparty clearing and settlement model will set a new standard in client risk management and enable considerable savings in settlement costs.”
The new service will be available across more than 5,000 European securities, covering all equity instruments in 14 countries. Pipeline embarked on a soft launch in Europe in early April and full launch is targeted for the second half of May.