Swiss market operator SIX Group has reported an increase in its international business volume in the 2011 business year, based partly on its support for clearing interoperability and healthy trading volumes in its Swiss Exchange business.
Operating income at SIX Group was 3% higher than last year, at €1.04 billion, while Group net income rose by 25.9% to €181.19 million. Exchange-traded funds were cited as a factor in the increase in trading volumes, allowing the Swiss Exchange to record its second best year ever, after 2007. But SIX also cited the opening up of the European clearing market as a key contributor to growth for its SIX x-clear central counterparty (CCP). According to the firm, clearing transactions originating abroad now outnumber those from Switzerland for the first time.
SIX x-clear has offered clearing interoperability on the London Stock Exchange (LSE) main market, together with LCH.Clearnet, since December 2008. An SIX spokesperson said that SIX x-clear now clears for between 25-27% of LSE trades.
After European regulators gave the green light to expand interoperability in July 2011, SIX x-clear was able to offer clearing services in additional markets, including Turquoise, the multilateral trading facility owned by the LSE, which it added earlier this month.
Interoperability gives market participants the ability to consolidate their trading flows with one CCP, thereby allowing them cutting costs on clearing and settlement through netting efficiencies.
Block trading partnership
Launched last July, the Swiss Exchange’s partnership with block trading network Liquidnet also contributed new income for the Group. In February, the Swiss Liquidnet Service (SLS) reported €209.96 million in turnover, across 290 trades, bringing the total for 2012 to €289.94 million over 665 trades.
The SLS allows users to gain access to all shares listed on SIX Swiss Exchange as well as those in other European markets, including the UK, Germany, France and the Netherlands. Trades executed in SLS are based on the mid-price of the real-time bid/ask spread on the given primary exchange – a system which SIX says offers price advantages of up to 70 basis points.
“Through this partnership, Liquidnet and SIX Swiss Exchange have created a unique offering for the market,” said Christian Katz, CEO, of SIX Swiss Exchange. “Our members are not only able to access more quality block liquidity, but also realise the benefits of significant price improvement and reduced market impact on large orders. By working with Liquidnet, we are further internationalising our exchange whilst underlining our position as the independent investment network of choice for our members. We look forward to the continued success of the offering as we look to expand access to additional markets.”