EuroCCP today announces that from Monday 12 August its customers can benefit from cross-platform netting in UK and Irish stock.
This service enables trades in the same security on the same day executed by a trading firm to be netted into a single settlement obligation on all the multilateral trading facilities for which EuroCCP clears.
The service has recently received regulatory approval from the Financial Conduct Authority and the Bank of England as well as agreement by the HMRC. Up until now, firms trading the same UK or Irish stock on multiple MTFs had to settle the net obligation from trades on each MTF separately. By using the cross-platform netting service, firms that trade the same UK or Irish stock on two MTFs immediately realise 50% savings in settlement costs; if they trade the same stock on three MTFs they realise 67% savings, and so on.
EuroCCP already has five customers signed up to use the service and more are expected in the coming days. The new service is expected to deliver substantial annual savings to EuroCCP Participants, estimated at between €1.4 to €2.0 million per year. Netting also reduces the value of settlement obligations and the associated risks.
Commenting on the launch of the service, Diana Chan, CEO, EuroCCP, said, "Delivering the benefits of cross-platform netting is another example of EuroCCP's dedication to meeting customer needs. The rapid take-up from our customers for this service illustrates the focus of trading firms on reducing settlement and other post-trade costs."
"Cross-platform netting is an essential prerequisite to realising the full benefits of a pan-European equities trading market. Settlement obligations for trading firms are reduced into a single net receipt or delivery per day for each UK and Irish security traded, regardless of the number of trades and the number of MTFs that firms execute trades on."