Stockholm, 22 June 2011
The recent financial crisis has highlighted the importance of stable and resilient financial systems. Efforts to improve market stability are being coordinated globally and a complete overhaul of the regulatory framework in both the EU and US is expected to result in a new regulatory regime for Central Counterparties (CCPs) by the end of 2012. NASDAQ OMX will be required to adapt to the new regulations and at the same time ensure member implementation of new requirements and features.
NASDAQ OMX Clearing* manages risk through a comprehensive counterparty risk management framework, which is made up of policies, procedures, standards and resources. NASDAQ OMX Clearing faces both traditional business risks and specific risks unique to derivatives clearing services. The most noteworthy risk is counter-party default, i.e. the risk that one or several market participants will default on their obligations to the clearing organization. Today, NASDAQ OMX Clearing does not maintain a guarantee fund or reserve fund to which users contribute and does not enforce a loss-sharing scheme among its members. This means that in a default situation today NASDAQ OMX Clearing’s own risk-bearing capital is at risk and not that of the members.
One proposed requirement, stipulated in the European Market Infrastructure Regulation (EMIR), is to make it mandatory for CCPs to have a default fund to which clearing members of the CCP will have to contribute. This proposal has a direct effect on the current setup for NASDAQ OMX Clearing. We are currently reviewing the implementation of a member sponsored default fund** with March 1, 2012 as the target launch date. NASDAQ OMX is committed to bringing forward an optimal default fund structure considering member perspectives, legal implications and efficient implementation processes in order to ensure a robust and equitable capital framework.
Members required to contribute to a default fund are:
- General Clearing Members
- Clearing Members
Based on this, NASDAQ OMX Clearing has published a Default Fund Policy Paper (Rev 1) that can be downloaded from nordic.nasdaqomxtrader.com/defaultfund. Going forward NASDAQ OMX will continuously publish documentation relevant for the implementation of the default fund on this page.
For further information on individual member’s indicative contribution level, please contact:
David Sjöblom, Risk Management, phone +46 8 405 6377.
Trond Svensgaard, Head of Risk Management, European Commodities, phone +47 9012 3679
* NASDAQ OMX Clearing, a secondary name of NASDAQ OMX Stockholm AB, is authorized and supervised as a European multi-asset clearing house by the Swedish Financial Supervisory Authority in Sweden as well as authorized to conduct clearing operation in Norway by the Norwegian Ministry of Finance. The clearinghouse acts as a CCP for on exchange and OTC trades in equity derivatives, fixed income derivatives, physical power and carbon contracts as well as power derivatives.
** The NASDAQ OMX Clearing default fund model is currently being reviewed by the Swedish Central Bank and Financial Supervisory Authorities in Sweden and Norway.
About NASDAQ OMX
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,500 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX first North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius.
For more information about NASDAQ OMX, visit http://www.nasdaqomx.com. *Please follow NASDAQ OMX on Facebook (http://www.facebook.com/pages/NASDAQ-OMX/108167527653) and Twitter (http://www.twitter.com/nasdaqomx).
About NASDAQ OMX Commodities
NASDAQ OMX Commodities is the brand name for the NASDAQ OMX Group’s worldwide suite of commodity related products and services. The NASDAQ OMX Commodities offerings include power, natural gas and carbon emission markets and clearing services. NASDAQ OMX Commodities is a trademark of the NASDAQ OMX Group, Inc.
NASDAQ OMX Commodities Europe is the trade name of NASDAQ OMX Oslo ASA which is authorized as a commodity derivatives exchange by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with NASDAQ OMX Commodities Europe are subject to clearing with NASDAQ OMX Clearing.
For more information, visit www.nasdaqomxcommodities.com.
NASDAQ OMX's Cautionary Note Regarding Forward-Looking Statements
The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about NASDAQ OMX's products and offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to factors detailed in NASDAQ OMX's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.
This document is being directed solely at and may only be communicated to persons: (i) who have professional experience in matters relating to investments as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO") or, (ii) who are high net worth companies, unincorporated associations and trustees of high value trusts within Article 49(2)(a)-(d) of the FPO, or (iii) to whom it may otherwise be lawful to distribute it (all such persons together being referred to as "Relevant Persons"). Any investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.