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Nasdaq OMX's CCP Partners Set Interoperability Timetable for Nordic Markets

EMCF, EuroCPP and SIX X-clear will offer Nordic markets interoperability by Jan., 29, 2010.

Nasdaq OMX is moving forward with plans to achieve interoperability for its central counterparty clearing (CCP) service in Nordic markets. Today, the global exchange operator said that its three 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 clearinghouses to clear and settle their trades.

Today Nasdaq OMX offers optional CCP on its Nordic markets through EMCF, and will on Oct. 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.

In a statement, Hans-Ole Jochumsen, president of Nasdaq OMX Nordic said, ”We are enthusiastic about the determination among our CCP partners to accomplish interoperability and we are confident that a competitive CCP model will act to drive liquidity and lower investor costs. This agreed-upon timeline will allow Nasdaq OMX Nordic to go from bilateral to competitive clearing in only 16 months, making us the first regulated market to offer CCP with a choice of three different service providers,” Jochumsen added in the release.

CCP involves the legal transfer of obligations to a central counterparty, which becomes the buyer to the seller and the seller to the buy. With the CCP counterparty risk — the risk that one party to a trade suffers losses because the other party cannot fulfill its obligations — is mitigated, according to Nasdaq OMX.

Interoperability between clearing houses allows market participants to choose the CCP they prefer to use, and also enables cross netting of trades for firms that use the same CCP for transactions executed on different trading venues. This provides significant cost savings from lower margin requirements, fewer settlements and simpler operations, according to the release.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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