Nasdaq OMX buys stake in EMCF

Nasdaq OMX buys stake in EMCF

Transatlantic exchange Nasdaq OMX is acquiring a 22% equity stake in European Multilateral Clearing Facility (EMCF), the Fortis Bank subsidiary that was taken over by the Dutch government.

EMCF provides clearing for European equity trading on exchanges and multilateral trading facilities, including Nasdaq OMX Europe, Chi-X Europe and Bats Trading Europe. Earlier this month the unit was passed to the Dutch government as part of a EUR16.8 billion rescue package for Fortis.

In today's statement Nasdaq OMX says the ownership structure of EMCF "will be opened to a select number of order flow providers and financial institutions".

"This will further strengthen order flow to EMCF, accelerate EMCF's operation as an independent entity and enhance EMCF's financial capacity," says the exchange.

As part of the deal - which is subject to regulatory approval - EMCF will take a five per cent stake in Nasdaq Clearing Corporation (NCC), a clearing and settlement system for US cash equities that the exchange plans to launch in 2009.

Commenting on the EMCF move, Bob Greifeld, CEO, Nasdaq OMX, says traders in Europe today face a fragmented post-trade landscape and investing in EMCF "allows us to provide a cohesive clearing solution to our customers and a cost and risk-efficient clearing model".

Jan Booij, CEO, EMCF, says being owned by multiple industry players will guarantee that EMCF will continue to deliver benefits to the market participants.

In a further move Nasdaq OMX says it plans to introduce CCP clearing, order routing and new trading technology for its Nordic markets. The US-based exchange operates exchanges in Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius.

Nasdaq OMX says it will introduce a CCP mechanism for cash equity trading on its exchanges in Nordic countries - with EMCF providing the clearing services. Optional CCP clearing will be introduced from January 2009 with a full offering planned to be in effect from June. A 20% discount will be offered on the variable part of the trading fee to all CCP cleared trades.

In a further development, Nasdaq OMX says it will implement a new trading platform in the fourth quarter of 2009, placing all Nasdaq OMX equity markets on INET technology. The new platform will further improve efficiency, reduce latency and increase throughput, says the exchange.

Finally, subject to regulatory approval, order routing functionality between Nasdaq OMX's Nordic market and its newly-launched European platform will be introduced by Q4 2009. This will enable Nordic participants to trade all securities traded on Nasdaq OMX Europe.

"We will deliver important customer benefits including reduced latency and transaction costs, straightforward cross-border trading, and a cost and risk-efficient clearing model," says Hans-Ole Jochumsen, EVP, Nasdaq OMX.

Nasdaq's move to revamp its Nordic business comes amid preparations for the launch of Burgundy, an alternative trading facility being set up by a group of the largest banks and brokers in Sweden that will provide trading in Nordic equities.

The new multilateral trading facility (MTF) is being established by Swedish banking groups Swedbank, Handelsbanken and SEB, along with brokers Neonet, Carnegie, Nordnet, Kaupthing, Ohman, Avanza and Evli and is expected to launch in the first half of 2009.

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