The structure will support two interlinked CCP's, the primary cross border CCP being London Clearing House ( LCH ), with x-clear acting as CCP in cases where both parties to a trade have a clearing membership with x-clear. Both CCPs will clear the full range of stock traded on virt-x.
The model builds on the strengths of the existing virt-x settlement arrangement among three CSD's ( Crest, SIS and Euroclear ) whereby virt-x members may choose their preferred settlement venue within a low-cost, straight-through processing environment.
The advantages provided by a CCP structure include:
- anonymous trading
- centrally managed counterparty credit risk
- reduced costs through netting of trades
- streamlined access to the user's settlement location of choice
- harmony of approach to corporate actions across CSDs
David Hardy, LCH CEOsaid: "LCH is delighted to be asked to take such a prominent position in the development of the virt-x market. This is the second central counterparty service to be launched by LCH EquityClear(tm), and clearly demonstrates the demand for a CCP model, that delivers anonymity, operational efficiencies, security and netting to market users. LCH's role as a CCP has quickly established itself as a key feature of cash equity market trading and a major benefit to the underlying central market. The virt-x pan-European exchange has made remarkable progress since its launch during the summer, and, with this development, LCH looks forward to sharing in an exciting period of growth".
Fritz Klein, Member of the Executive Board of FSG Financial Services Groupof x-clear added: "The establishment of x-clear as a CCP for virt-x marks an important milestone in the further development of the Swiss based European Value Chain, which is designed and committed to offer low-cost but highly sophisticated and automated clearing and settlement services to its domestic and international members, thus allowing true and seamless straight through processing for all markets covered by virt-x. x-clear relies on the strong support from SIS members to which it offers a tailor-made solution within the framework of the widely acknowledged FSG infrastructure."
Iain Saville, the Chief Executive of CRESTCosaid, "We are a strong supporter of the flexible, customer-led approach to settlement pioneered by virt-x which has already delivered clear benefits to users. Their approach will make a reality of customer choice as regards settlement location - effective choice is the best way to drive down costs and improve service quality. We will continue to work closely with them as they move forward."
Ignace R. Combes, Vice Chairman of the Management Committee of Euroclear Banksaid, "As the only settlement system to be working with all of Europe's existing CCPs, we are delighted to share our cross-border expertise with virt-x members as they increase their trading activity through the new CCP."
