Swiss clearer SIX x-clear has agreed to supply central clearing services for all trades conducted on the new dark multilateral trading facility (MTF) for European stocks, operated by Swiss investment bank UBS.
The use of a clearing counterparty (CCP) is intended to reduce counterparty risk and settlement cost by offering market participants netting, collateral management, margining and settlement for all securities traded on UBS MTF. SIX x-clear is also supporting UBS MTF's plan to offer a ”user choice model' that would add rival clearing house EuroCCP, pending regulatory approval of interoperability between Europe's CCPs.
“With the regulatory spotlight firmly placed on clearing and more specifically interoperability, offering clearing services and supporting UBS MTF is another important step in our market coverage and will provide clients with the opportunity of clearing choice on a wider number of venues,” said Marco Strimer, CEO of SIX x-clear. “We believe that past events have highlighted the benefits of the centralised clearing model.”
SIX x-clear already has an interoperability agreement with LCH Clearnet, which allows member firms of the London Stock Exchange and SIX Swiss Exchange to choose between the two CCPs, thereby promoting competition and lowering post-trade fees. However, further moves towards interoperability were put on hold on 12 February 2010, when regulators asked CCPs to provide additional detail on arrangements for raising collateral to offset the extra risk created by inter-CCP operability.
“UBS MTF is committed to greater simplicity, lower transaction costs and reducing market impact that drive market efficiencies,” commented Robert Barnes, CEO of UBS MTF. “We look forward to reduce post-trade settlement risks and enhance scale benefits for members.”
SIX x-clear has also stated that it will cut its prices and introduce a new volume-based tariff structure from 1 January 2011, as part of an effort to build up its position as a pan-European CCP.
SIX x-clear is a unit of SIX Securities Services, the subsidiary of Swiss-based SIX Group responsible for providing of custody, CCP clearing, risk management, real-time settlement, collateral management and share registration services.