Burgundy adds third clearer as Nordics wake up to interoperability
Burgundy, a multilateral trading facility (MTF) for Nordic
stocks, has added EuroCCP as its third clearing option, piling further pressure
on domestic exchange Nasdaq OMX Nordic – which delayed plans for a similar
initiative earlier this year – to provide interoperability.
Members of Burgundy can now opt to clear their trades
through EuroCCP, SIX x-clear or the MTF’s incumbent clearer EMCF, allowing them
to consolidate flows through the central counterparty (CCP) of their choice and
reduce costs through netting.
"We have listened to our customers who told us they
wanted to be able to choose who they clear with," said Olof Neiglick, CEO, Burgundy. "We expect
interoperable clearing to push down overall clearing costs, which is great news for all equity traders operating in the
While some market participants previously suggested interoperability was not a major concern for the Nordic region compared to the rest of Europe – primarily because Scandinavian markets only started clearing trades through CCPs in 2009 – there are signs the issue is now on the radar for local market participants.
"Our members were disappointed at the delay announced by Nasdaq OMX, but we will continue to discuss the matter with them and hope it’s just a matter of timing,” said a spokesperson for the Swedish Securities Dealers Association. “Interoperability is an important issue for the Nordic trading community, not just for the reduction of trading costs, but also in terms of the quality of service that different central counterparties offer."
Nasdaq OMX Nordic, which runs stock exchanges in
Sweden, Denmark and Finland, laid out plans to introduce clearing
choice from last April. However, the bourse operator postponed its plans,
citing the risk of regulatory contradiction that could force members to make
“As long as the proposals
relating to how interoperability requests should be handled are not finalised,
there is a risk the model will be different to what is in place now,” Hans-Ole
Jochumsen, president of Nasdaq OMX Nordic, told theTRADEnews.com in May. “This
could mean those already offering clearing choice could be forced to make
Specifically, Jochumsen cited potential difference between principles for financial market infrastructure that were developed by the
Committee on Payment and Settlement Systems and the Technical Committee of the
International Organisation of Securities Commissions, and the European market
infrastructure regulation, which includes the criteria national regulators
should use for assessing interoperability requests.
Nasdaq OMX said it planned to
make its intentions on interoperability clear by October this year.
“We remain committed to being
the first primary exchange to offer full interoperability and we have
maintained dialogue with SIX x-clear, EMCF and EuroCCP,” said Björn Sibbern,
senior vice president, equities market, Nasdaq OMX Nordic. “However, as the
venue for price formation for Nordic securities, we believe the best course of
action is to wait until the regulatory landscape is clearer.”
Meanwhile, investment bank Jefferies has become an
individual clearing participant of EuroCCP, meaning it is able to clear its own
trades through the CCP. The addition takes the number of clearing members on
EuroCCP, half of which are individual clearing members.