The seven leading European investment banks comprising Turquoise - the proposed multi-lateral trading facility (MTF) established in response to the European Union's Markets in Financial Services Directive (MiFID) - have today announced that they have selected EuroCCP to deliver a pan-European clearing & settlement solution on a single platform. EuroCCP will partner with Citi's global transaction services business as its settlement agent. This decision allows Turquoise to take a significant step closer towards delivering a substantial reduction in the costs of clearing and settling equity trades.
EuroCCP, the European Central Counterparty Ltd, is a subsidiary of the Depositary Trust & Clearing Corporation (DTCC). Subject to the receipt of the approval of the Financial Services Authority, EuroCCP will be a UK Recognised Clearing House, headquartered in London and regulated by the FSA. Like Turquoise, DTCC and its subsidiaries are user owned and user governed.
Citi's global transaction services business will act as settlement agent in partnership with EuroCCP. The partnership recognizes Citi's extensive pan-European securities network and its ability to efficiently process local settlement through its strong links with the European central securities depositories.
The Turquoise specification stipulated that the MTF should have a service provider with a proven track record in providing a highly reliable infra-structure, access to a well developed European settlement network, an appropriate regulatory & legal structure and the right pricing. The EuroCCP/Citi solution meets all of these criteria.
EuroCCP will act as the central counterparty and will provide netting, enable anonymous post-trade processing and provide a full range of risk management services. Positions will then be passed to Citi's global transaction services business for settlement in the respective central securities depositories.
A spokesman for Turquoise said: "A pan-European trading facility requires a single pan-European approach to clearing and settlement. We expect our agreement with EuroCCP will deliver the quantum leap that the market place needs. It gives us immediate economies of scale through the use of the existing infrastructure of its parent company. Their combination with Citi's global transaction services business will ensure the best single cross-border settlement network in Europe".
