EuroCCP and SIX x-clear Break New Ground on Interoperability
DTCC’s European subsidiary EuroCCP and Swiss clearing entity SIX x-clear Ltd have signed a memorandum of understanding outlining their commitment to interoperate with each other, a move that marks a major step forward for the concept of central counterparty (CCP) interoperability in Europe.
The interoperability model EuroCCP and SIX x-clear are pursuing will allow for competitive clearing within those exchanges or platforms that wish to adopt a multi-CCP model, allowing customers across Europe to select the CCP of their choice. Turquoise will be the first platform to offer this model to its participants.
The EuroCCP/SIX x-clear interoper-ability link is targeted to go live in the third quarter of 2009.
Advance for ‘open architecture’
The EuroCCP/SIX x-clear agreement will be designed generically, to allow any platform that chooses to have a multi-CCP model with EuroCCP and SIX x-clear a rapid implementation. The agreement should speed connectivity and availability of interoperable clearing if and when a trading platform selects both clearing firms.
“Customers want to find the best clearing and settlement solution for their firms,” said Diana Chan, CEO of EuroCCP. “This groundbreaking agreement between EuroCCP and SIX x-clear is leading the way for the post-trade industry to develop an open architecture in central counter-party clearing in Europe, and moves Europe closer to the goal of interoperability among CCPs envisioned by the European Code of Conduct for clearing and settlement.”
Competition among European trading venues is a central aim of MiFID (the Markets in Financial Instruments Directive), the European Union law that took effect in November 2007. Inter-operability between CCPs will be key in enabling this competition to develop and flourish. EuroCCP and SIX x-clear have signed the European Code of Conduct, which includes Access and Interoperability Guidelines.
“SIX x-clear has always been a fierce proponent of interoperability among CCPs in order to allow client choice,” said Marco Strimer, CEO of SIX x-clear Ltd. “The development of standards and protocols for interoperability as a core market service is significant. It represents a major step forward in providing benefits to the industry infrastructure and their clients alike.”
Turquoise leads the way
Turquoise, a multilateral trading facility based in London, launched operations in 2008. It will be the first platform to offer interoperability between EuroCCP and SIX x-clear.
“Turquoise is committed to delivering differentiated value for its members, as demonstrated by our interoperability offering,” said Eli Lederman, CEO of Turquoise. “We support greater competition at every stage of the trading process, to improve efficiency and bring down the overall cost of trading. Turquoise warmly welcomes the agreement between EuroCCP and SIX x-clear and looks forward to delivering one of the most efficient clearing and settlement arrangements in European equities trading.”
More on SIX x-clear and EuroCCP
SIX x-clear Ltd, part of integrated Swiss financial market infrastructure provider SIX Group Ltd, acts as the CCP for SWX Europe Limited, SIX Swiss Exchange Ltd and the London Stock Exchange. SIX x-clear also is in charge of risk management within the Securities Services division of SIX Group. It is licensed as a bank under Swiss law and holds Recognised Overseas Clearing House status in the U.K.
EuroCCP is a U.K.-incorporated, Financial Services Authority-regulated Recognised Clearing House, headquartered in London. EuroCCP was formed to provide clearing and settlement services for a wide range of trading venues across Europe, offering the scale economies of the U.S. market to European market part-icipants. It currently clears equity trades in 15 countries and in 7 currencies.
EuroCCP has been appointed to provide CCP services by Turquoise, SmartPool and NYSE Arca Europe for equity trades. In addition, EuroCCP is working to develop a CCP solution for the U.K. business of SecFinex, a securities lending trading platform owned by NYSE Euronext, Fortis and Société Générale.
Market participants can trade equities on any venue EuroCCP supports and have their transactions netted for settlement and/or margin purposes for the same security traded on the same day, thereby reducing costs and operational risks. @