Nasdaq OMX Nordic, part of The Nasdaq OMX Group (Nasdaq:NDAQ), today announces that its central counterparty clearing (CCP) service partners EMCF, EuroCCP and SIX x-clear have agreed to achieve interoperability by January 29th 2010.
Interoperability between the CCP parties allows members at NASDAQ OMX Nordic exchanges to interact with multiple clearing houses to clear and settle their trades.
Today NASDAQ OMX offers optional CCP on its Nordic markets through EMCF, and will on October 9th, 2009, introduce mandatory CCP clearing (subject to regulatory approvals). In May 2009 NASDAQ OMX entered agreements with CCP clearing service providers SIX x-clear and EuroCCP in order to support a competitive clearing model on its Nordic markets.
Hans-Ole Jochumsen, President of NASDAQ OMX Nordic said, "We are enthusiastic about the determination among our CCP partners to accomplish interoperability and we are confident that a competitive CCP model will act to drive liquidity and lower investor costs. This agreed-upon timeline will allow NASDAQ OMX Nordic to go from bilateral to competitive clearing in only 16 months, making us the first regulated market to offer CCP with a choice of three different service providers."
Commenting on the announcement, Jan Booij, Chief Executive Officer of EMCF said, "We look forward to offering the Nordic community a true interoperability model with three CCP's involved. This initiative can truly be seen as a milestone in Europe since the implementation of MIFiD and we trust it will encourage other European Exchanges to offer a similar model to their members."
Marco Strimer, Chief Executive Office of SIX x-clear said, "We will continue to work with NASDAQ OMX and the other partners to create choice of CCP's in the Nordic market and allow a pain-free transition for members that wish to change CCP service provider. We look forward to helping the market grow through our role of CCP for risk management, efficiency and innovation."
Diana Chan, Chief Executive Officer of EuroCCP, said, "EuroCCP is pleased to be moving forward with NASDAQ OMX and fellow clearing firms EMCF and SIX x-clear to establish CCP interoperability in the Nordic markets. NASDAQ OMX Nordic clients will benefit from having a truly competitive choice of clearers, and EuroCCP looks forward to helping to deliver this important initiative."
Central Counterparty Clearing and Interoperability
Central counterparty clearing involves the legal transfer of obligations to a central counterparty, which becomes the buyer to the seller and the seller to the buyer. With the CCP counterparty risk -- or the risk that one party to a trade suffers losses because the other party cannot fulfill its obligations -- is mitigated.
Interoperability between clearing houses allows market participants to choose the CCP they prefer to use, increasing competition and lowering investor costs. CCP interoperability also enables cross netting of trades for firms that use the same CCP for transactions executed on different trading venues, which provides significant cost savings from lower margin requirements, fewer settlements, and simpler operations.
The availability of CCP services from SIX x-clear and EuroCCP on NASDAQ OMX Nordic markets, on January 29th is conditional on FSA approval of Interoperability Agreements between EMCF and SIX x-clear and EuroCCP.