Pan-European cash equities clearing house EuroCCP has signed a memorandum of understanding to become the clearing house for pioneer Spanish multilateral trading facility (MTF) PAVE.
PAVE was conceived in August 2010 and plans to begin trading in H2 2011. It will use alternative trading venue Equiduct's trading platform, and will be supported by the market making experience of Equiduct shareholders Citadel Securities and Knight Capital.
The MTF will offer a lit order book and a mid-point dark pool that will use prices from its displayed execution platform as its reference. The new agreement establishes EuroCCP as the first clearing house to service a Spanish trading platform, as the Spanish markets which collectively form the incumbent Bolsas y Mercados Españoles (BME) use Iberclear, the country's central securities depositary for clearing and settlement.
“PAVE's presence will increase competition, helping price formation and improving efficiency in the Spanish market,” said Diana Chan, CEO of EuroCCP.
EuroCCP is the European clearing subsidiary of US clearing body Depository Trust & Clearing Corporation (DTCC) and currently clears trades in more than 4,000 securities, with 26 participant members in Europe.
“PAVE seeks to increase liquidity in Spanish equities and bring international traders to the market,” said Javier Tordable, partner in PAVE. “As such, it is vital that we develop a relationship with a clearing house that will help us to achieve our ambitions.”
PAVE hopes to challenge the BME, which accounted for some 84% of total equity turnover in the country as of 31 December 2010.