The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) together with the Securities Dealers Associations in Denmark and Sweden and the Federation of Finnish Financial Services are pleased to announce a joint timetable for introducing Central Counterparty (CCP) on the NASDAQ OMX exchanges in Copenhagen, Helsinki and Stockholm with voluntary CCP from February 2009 and full CCP from October 9, 2009. Implementation of voluntary and full CCP is subject to approval or consent from the Financial Services Authorities (FSAs).
In October 2008, NASDAQ OMX announced its intention to introduce CCP in the Nordic region in 2009. Since then, NASDAQ OMX and the Securities Dealers Associations in Denmark and Sweden and the Federation of Finnish Financial Services have outlined detailed plans on the CCP implementation.
“First of all, the implementation of CCP fulfils a more insistent need of reducing counterparty risks. Secondly, a CCP ensures that the Nordic market is keeping up with international standards,” says the chair of the Nordic Securities Association and of the Danish Securities Dealers Association Steen Blaafalk and continues: “We are pleased to see a significant commitment among the market participants and NASDAQ OMX to find the right solution for the Nordic markets which comprises a multiple and therefore competitive CCP solution.”
"We have designed the CCP solution in the Nordic region together with our customers, and we are pleased to jointly announce the concept and timeline for CCP. This introduction will bring multiple benefits to our customers and to the Nordic financial markets by significantly reducing counterparty risk. Most European markets today are centrally cleared and implementation of CCP in the region is fundamental to future competitiveness of the Nordic markets. We are delighted to be able to offer voluntary CCP clearing at competitive rates beginning in February 2009,” said Hans-Ole Jochumsen, Executive Vice President NASDAQ OMX.
The CCP solution means that for each and every trade the CCP becomes the counterparty to both the buying party and the selling party; the CCP enters into the trade as the buyer to the seller, and as the seller to the buyer. In this way, CCP reduces counterparty risk, which is the risk that one party to a trade suffers losses because the other party cannot fulfill its obligations.
The common solution will operate as follows:
- NASDAQ OMX has appointed European Multilateral Clearing Facility (EMCF) to operate as CCP on the Nordic equity markets from the time of launch.
- NASDAQ OMX will seek an additional CCP and appoint any requesting CCP that fulfils the minimum requirements for becoming a CCP on the Nordic markets without delay.
- NASDAQ OMX is committed to working for interoperability effective from launch.
- The Nordic customization initiative as well as the plan for a Nordic clearing fund have been terminated.
- Netting with other market places will be possible.
- Instruments cleared by CCP from October shall be decided in co-operation with the exchange members.
- The appointed CCPs must be account holders with the central banks and must be direct members of the central securities depositories (CSDs).
- A Nordic Steering Committee shall manage the project until its implementation. Members of the committee are representatives from NASDAQ OMX, the SDAs and the CSDs.
- A CCP Advisory Board shall be formed effective from the implementation. Members will be exchange members, the three associations and NASDAQ OMX. Appointed CCPs can participate by invitation.
