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NASDAQ OMX Nordic, part of The NASDAQ OMX Group Inc. (NASDAQ:NDAQ), today announces its intention to introduce competitive Central Counterparty (CCP) clearing by end of April 2012* in cooperation with EMCF, EuroCCP and SIX x-clear. The April 2012 timeline was established in consultation with NASDAQ OMX’s trading members. Interoperability will allow members at NASDAQ OMX Nordic exchanges to choose between multiple clearing houses to clear and settle their trades.
NASDAQ OMX Nordic implemented CCP clearing on its markets in Stockholm, Helsinki and Copenhagen in the autumn of 2009, and was then the first European exchange to announce its intent to introduce a competitive clearing model. Due to regulatory issues related to interoperability between clearing houses, the process was delayed. A solution on interoperability proposed by the involved clearing houses has satisfied the CCPs’ regulators, allowing NASDAQ OMX Nordic to move forward with its introduction on competitive clearing.
Hans-Ole Jochumsen, President of NASDAQ OMX Nordic said: “NASDAQ OMX early declared our intent to pursue a competitive clearing model, and with a regulatory consensus now in place, we are eager to move forward. We are confident that a competitive CCP model will act to drive liquidity and lower investor costs, thus benefiting our clients and the European capital market as a whole.”
Petri Simberg, Chairman of the Nordic Securities Association commented: “Our members are positive and committed to the introduction of a competitive and interoperable CCP model in the Nordics. A solution with a truly competitive choice of clearers will increase the attractiveness of the Nordic equities market and result in liquidity and cross netting advantages that will benefit our members.”
CCP clearing on the Nordic markets encompasses large cap companies listed in Stockholm and Copenhagen, and large- and mid cap companies listed in Helsinki. Norwegian shares traded in Stockholm and ETFs listed in Stockholm and Helsinki are also CCP cleared.
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, thus increasing competition. CCP interoperability also enables cross netting of trades for firms that use the same CCP for transactions executed on different trading venues, which enables cost savings from fewer settlements, and simpler operations.
*) The availability of competitive CCP services at NASDAQ OMX markets by April 2012 is conditional of necessary regulatory consent or approvals from the regulators of NASDAQ OMX Nordic exchanges and the involved CCP parties.
