ABN AMRO Clearing Bank, BATS Chi-X Europe, DTCC and NASDAQ OMX Sign Landmark Agreement to Create New CCP, EuroCCP N.V.
The owners of EMCF – ABN AMRO Clearing Bank and NASDAQ OMX – and owner of EuroCCP – DTCC – along with BATS Chi-X Europe, are signatories to the agreement.
EMCF and EuroCCP share the same vision about the development of European cash equities clearing and, through initiatives such as pan-European clearing and four-way interoperability, have fostered competition in the market. As such the two firms are a good strategic fit.
Subject to approval from regulators and competition authorities, the new CCP, to be named EuroCCP N.V., will bring together the strengths and capabilities of each firm to deliver greater efficiencies and sustainable competition to the pan-European market place. The new CCP will use the risk management framework and customer-service organisation of EuroCCP, and it will run on the technology and operations infrastructure of EMCF.
EuroCCP N.V. will be headquartered in Amsterdam, with customer-facing functions located in London and Stockholm.
Diana Chan, CEO, EuroCCP and CEO designate of the new company, said: “The signing of the sale and purchase agreement is a significant step towards launching the new CCP and demonstrates market participants’ desire and support for initiatives that are pro-competition and strengthen the market’s infrastructure and risk mitigation while driving down costs for users. We are focused on making the migration of our customers’ business as straightforward as possible and are working closely with them to ensure they can fully benefit from what the new business will deliver to them.”
Jan Booij, CEO of EMCF and COO designate of the new company, said: “We welcome this further development and look forward to delivering the sustainable best practices of both companies from a single cost base. This will benefit the platforms that connect to us and the customers who clear with us.”
Combining the strengths of EMCF and EuroCCP will deliver a number of benefits to customers including:
Sustainable competition in European cash equity clearing;
Substantial settlement cost savings resulting from increased settlement netting and reduced inter-CCP settlements;
Sustainable low cost clearing with a single cost base;
Reduced collateral obligations as a result of portfolio margining and single guarantee and interoperability funds;
Single set of membership and connectivity fees;
Superior customer service, risk management, IT and operations as a result of the combination.
The transaction is expected to complete once the necessary regulatory and competition authority approvals are received.