NASDAQ OMX Nordic, part of The NASDAQ OMX Group, Inc. has announced that its central counterparty clearing (CCP) service partners EMCF, EuroCCP and SIX x-clear have agreed to achieve interoperability by January 29th 2010. Interoperability between the CCP parties allows members at NASDAQ OMX Nordic exchanges to interact with multiple clearing houses to clear and settle their trades.
Today NASDAQ OMX offers optional CCP on its Nordic markets through EMCF, and will on October 9th, 2009, introduce mandatory CCP clearing (subject to regulatory approvals). In May 2009 NASDAQ OMX entered agreements with CCP clearing service providers SIX x-clear and EuroCCP in order to support a competitive clearing model on its Nordic markets.
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, increasing competition and lowering investor costs. CCP interoperability also enables cross netting of trades for firms that use the same CCP for transactions executed on different trading venues, which provides significant cost savings from lower margin requirements, fewer settlements, and simpler operations.
The availability of CCP services from SIX x-clear and EuroCCP on NASDAQ OMX Nordic markets, on January 29th is conditional on FSA approval of Interoperability Agreements between EMCF and SIX x-clear and EuroCCP.
