This collaboration takes place through the Linked Exchanges and Clearing (LEC) agreement, which gives the derivatives members of the participating exchanges access to a common order book. The LEC agreement was the first collaboration in the world to integrate trading from a number of exchanges through common trading and settlement systems. Around 25% of all the equity derivatives contracts traded on Oslo Børs are generated from the OM London Exchange (OMLX).
"Bringing EDX London into the LEC agreement to replace OMLX paves the way for a significant number of the London Stock Exchange´s 292 members to participate in trading, and this opens up new opportunities for the derivatives business of Oslo Børs. This important step is expected to contribute greater liquidity to trading through Oslo Børs, both in derivatives and equity instruments in general", comments Sven Arild Andersen, CEO and President of Oslo Børs.
The creation of EDX London involves OM selling 76% of its existing London business, OM London Exchange, to the London Stock Exchange. EDX London will use OM´s technology for derivatives trading and clearing. Once the new arrangements come into force in the second quarter of next year, members of the London Stock Exchange will be able to trade Scandinavian derivatives products through EDX London.
The Copenhagen Stock Exchange also intends to participate in this collaboration. This means that in due course of the members of the NOREX alliance of Nordic exchanges will offer derivatives trading through a single order book in which the London Stock Exchange will also participate.
"This new agreement is very much in line with our strategy at Oslo Børs of participating in the development of a wider international network of exchanges in order to improve international access to Norwegian securities and create greater liquidity for trading. The establishment of EDX London will strengthen the Nordic securities market, particularly for derivatives but also for the market as a whole", adds Sven Arild Andersen.
Facts
OM London Exchange (OMLX)
OM London Exchange was established in 1989 as a UK Recognised Investment Exchange, based on trading and clearing Swedish equity derivatives. The exchange has 84 international members and forms part of the LEC collaboration. Trading volume has increased continuously since the start of business, and the current daily volume of around 60,000 contracts is equivalent to some 25% of the total Swedish equity derivatives market.
LEC - Linked Exchanges and Clearing
LEC was established by independent stock exchanges and clearing houses coming together to offer a real-time trading system using a common order book so that derivatives members of all the exchanges involved can trade all the derivatives exchange's products. This was the first such collaboration anywhere in the world. The partners to the LEC agreement are currently Stockholmsbörsen, Oslo Børs, OM London Exchange and the Norwegian Options and Futures Clearing House (NOS). The Copenhagen stock exchange intends to join this collaboration. All trading through LEC is cleared through local clearing centres that can clear both domestic market and international products.
NOREX alliance - a harmonised Nordic market
NOREX is an alliance between the stock exchanges of Copenhagen, Reykjavik, Oslo and Stockholm, and was first established in 1998. The NOREX alliance offers broad distribution through the many members of the participating exchanges. Several of the world´s largest international investment firms are also members, and this helps to ensure that investors have easy access to the NOREX market no matter where in the world they are based. The alliance is based on collaboration between independent exchanges, and builds on the following principles to ensure an efficient market for its members:
- Cross membership. Members of any exchange in the NOREX alliance can trade on all the NOREX exchanges.br>
- Single point of liquidity. Companies need only be listed on one exchange in order to be traded by all members of NOREX.
- Common trading systems: SAXESS for equities, CLICK for derivatives and SECUR for clearing.
- Harmonised common regulatory framework.
