Omgeo and EuroCCP to develop central counterparty for hedge fund transactions

Omgeo and EuroCCP to develop central counterparty for hedge fund transactions

Post-trade utility Omgeo and clearing house EuroCCP have launched joint development of a pan-European equities central counterparty (CCP) service for hedge fund transactions.

The new service, which will be based on Omgeo Central Trade Manager (Omgeo CTM), is expected to enter pilot testing later this year, with a live launch anticipated in 2010. It will initially cover equities in 15 European markets and seven currencies

The partners say they are working with a broker industry user group to refine the service, which will aim to reduce counteparty risk in the hedge fund-to-broker transaction processing chain. The model will enable a prime broker to authorise locked-in trades and release them to EuroCCP, where the trades will be guaranteed, netted and routed to the proper European central securities depository (CSD) for settlement on a netted basis.

Diana Chan, CEO of EuroCCP, says: "We have a shared goal: to deliver automation and its benefits to as many counterparties as possible. With Omgeo's strong base of hedge fund clients and EuroCCP's robust central counterparty infrastructure and risk management expertise, together we can extend our capabilities to prime brokers and executing brokers."

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