Market operator Nasdaq OMX is gearing up to launch a clearing and settlement system for US cash equities that will compete directly with industry-owned Depository Trust and Clearing Corporation (DTCC).
Nasdaq completed the acquisition of the Boston Stock Exchange earlier this year and with this purchase obtained registered clearing agency - called the Boston Stock Exchange Clearing Corporation (BSECC) - which it plans to re-name The Nasdaq Clearing Corporation (NCC).
In a notice on a message board on the NasdaqTrader Web site, the exchange says it intends to operate NCC as an equities clearing agency in 2009 to guarantee trades, act as a central counterparty (CCP) and to provide continuous net settlement (CNS). Nasdaq says NCC will use its Inet technology.
NCC will compete with services currently provided by the DTCC. Nasdaq says the single agency model "has no competition to drive cost efficiency" and its new service will "lower the total cost of trading by driving efficiencies in US equities clearance and settlement".
Chris Concannon, Nasdaq OMX's EVP of transaction services, told Financial Times (FT) reporters that are some inefficiencies in US clearing for cash equities and there are a number of opportunities to help clients reduce clearing costs.
Concannon said the new system would operate in real time, allowing traders to know their margin obligations for the next day at the close of the current trading day.
In a separate move, Knight Capital Group has launched an electronic clearing settlement platform for credit default swaps (CDSs). The NetDelta platform can be used to settle new trades and will be extended to enable settlement of existing trades, says Knight.