02:31 PM
Dave Valiante
Dave Valiante
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EuroCCP to Launch Clearing & Settlement System Friday

The DTCC subsidiary ultimately expects to provide clearing and settlement services in more than 20 separate markets in Europe.

European Central Counterparty Limited (EuroCCP), a new provider of settlement services for multilateral trading facilities across Europe, is expected to launch on Friday.

Fifteen firms have gained approval as clearing participants. Of these, nine are founding members of Turquoise, including Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Merrill Lynch, Citi, UBS, BNP Paribas and Societe Generale.

The other participants of EuroCCP -- a London-based subsidiary of DTCC -- are ABN Amro, Barclays Capital, Credit Agricole Cheuvreux, Instinet, KAS Bank and Lehman Brothers.

Six of the 15 firms will be general cleaning participants who are able to clear and settle trades for about 35 trading firms who are not participants of EuroCCP.

The remaining firms are individual clearing participants who only clear and settle trades they execute.

By 5 September, when the Turquoise trading platform is scheduled to go live in full production, EuroCCP, expects to be clearing and settling trades in 1,300 equity issues across 13 European markets in seven different currencies. Ultimately, EuroCCP expects to provide clearing and settlement services in more than 20 separate markets in Europe.

Because EuroCCP guarantees trades for its participants, the process of bringing on new participants involves an extensive review of potential firms to ensure they can meet their settlement obligations, the company said.

As a participant of EuroCCP firms are required to meet rigorous financial requirements, including minimum levels of capital and financial performance standards. Firms are also required to put up collateral with EuroCCP that can be used in the event a participant firm is unable to fulfill its settlement obligations.

"The upcoming launch with these 15 firms marks a key milestone in the development of EuroCCP," said Diana Chan, CEO of EuroCCP. "They make up a significant portion of the equity trading community in Europe. We are also continuing to work with a number of other firms as they complete the requirements for participation, and we expect to announce additional individual and general clearing participants in the coming weeks."

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