Spanish regulator outlines market reforms

Spanish regulator CNMV has taken steps to reform the registration, clearing and settlement system in the country's financial markets, with the publication of a set of key changes.

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Spanish regulator CNMV has taken steps to reform the registration, clearing and settlement system in the country's financial markets, with the publication of a set of key changes. 

CNMV yesterday released a document outlining three major changes to the market - allowing netting for clearing processes, introducing one central counterparty (CCP) and having one central securities depository (CSD) by merging Iberclear's fixed income and equities platforms, CADE and SCLV respectively.

As a result, the Spanish market will have a new model, compromising of three parts: exchange platform SIBE, central counterparty MEFF, which expands from covering derivatives to now also including equities, and CSD Iberclear.

The proposals were welcomed by Spanish exchange group Bolsas y Mercados Españoles (BME), which operates SIBE, MEFF and Iberclear, saying the market model "features more efficient post-trade processes".

New single CCP MEFF will be responsible for carrying out the netting of trades to reduce counterparty risk. Trades will be netted for each account of the CCP member and also for each security.

CNMV also proposes changes to memberships, allowing market participants to register with one, two or three of the main market infrastructures. Before the reforms, trading members were forced to also register as settlement members.

In its report, the CNMV said the changes would align the Spanish market with European peers and improve competitiveness.

The first phase of changes, which includes the introduction of the single CCP, are expected to take effect in the second quarter of 2015. In the second phase, integration of CADE and SCLV and migration of settlement to TARGET2-Securities, the European Central Bank's system for cross-border securities settlement, will take place by Q1 2017. 

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