German exchange group Deustche Börse is committed to the European Commission’s Code of Conduct for Clearing and Settlement and forging links between its clearing house, Eurex Clearing, and other central counterparties (CCPs), according to Marcus Zickwolff, head of trading and clearing system design at the group.
However, the exchange is keen to ensure that any deals are struck on equal terms. “Reciprocal access to markets is a prerequisite for an interoperability deal,” Zickwolff told theTRADEnews.com. “That is the way to achieve an open market in the EU and Deustche Börse is happy to open up access to its markets in return for access to another.”
Deutsche Börse has three links to cash equities CCPs in the pipeline. The first is with Swiss clearer SIX x-clear, the CCP for SIX Swiss Exchange, Deutsche Börse’s joint-venture partner in the Eurex derivatives exchange. The Frankfurt-based firm is also working on deals with both the French and UK divisions of European clearing group LCH.Clearnet to gain access to trade flows from both the Euronext markets (France, Belgium, the Netherlands and Portugal) and the London Stock Exchange.
The x-clear link, which the firms have been working on since September 2007 following Deutsche Börse’s acknowledgement of the access and interoperability guideline of the EC Code of Conduct in July 2007, is likely to be the first to complete.
“While we have made good progress with the Swiss market, the progress so far on the two LCH requests is very limited,” said Zickwolff.
Zickwolff says progress toward interoperability has been delayed by events beyond their control. “In the first half of last year, we made good progress with SIX x-clear but then SIX decided to close down SWX Europe in London and merge the business with SIX Swiss Exchange in Zurich,” he explained. “We then focused for some months on the Euronext and LSE projects, but then Lehman Brothers collapsed, which completely changed everyone’s priorities.”
While several recently-announced CCP links have involved Europe’s two newest clearers, EuroCCP and EMCF, which provide CCP services for the new crop of pan-European multilateral trading facilities (MTFs), Deutsche Börse will limit its efforts to the three cash equities deals already in progress, for the time being.
“The way forward for Deustche Börse on interoperability is very clear now: our priority is to implement the link with SIX x-clear and we have two outstanding requests for the UK and Euronext markets. Our focus will be on getting these three links up and running.”
The exchange is working on further links in other asset classes. It is developing a connection to US options exchange The International Securities Exchange, which Eurex acquired in 2007, to clear US stock options within Eurex Clearing.