Eurex Clearing: Eurex Clearing, one of the world’s leading clearing houses, and SL-x Trading Europe (SL-x) have signed an agreement whereby Eurex Clearing will act as clearing house for securities borrowing and lending (SBL) transactions executed via SL-x’s innovative and patents pending electronic trading platform.
SL-x plans to launch the new platform in the fourth quarter of 2013 in 17 European equity markets. At the outset, Eurex Clearing will offer central clearing for SL-x’s SBL transactions in Belgian, Dutch, French, German and Swiss stocks. In these initial five markets SL-x’s platform aims to include approximately 2,000 stocks and Exchange Traded Funds that represent over 90 per cent of these markets’ stock on loan.
Eurex Clearing’s Lending CCP started in November 2012 and covers equities, fixed income, and ETFs. Since then, it has attracted the commitment of major market participants. The connection to SL-x’s multilateral trading facility (MTF) further enhances distribution of Eurex Clearing’s state-of-the-art clearing service.
SL-x’s platform with its advanced social networking technology offers unique negotiation and operational capabilities for hard-to-borrow, special, and general collateral stocks that preserve current market structure. SL-x and Eurex Clearing are working on the extension of the CCP service to other major European equity markets.
“We are very pleased to further expand distribution for the Lending CCP by working with SL-x. Our Lending CCP is widely recognized as industry leading and the first to preserve the special structure of the lending market. It helps banks to reduce the amount of capital they require to run their SBL businesses, enables them to improve operational efficiency, and reduces counterparty credit risk”, said Thomas Book, CEO of Eurex Clearing.
SL-x’s Chief Executive Officer Peter Fenichel added: “We are delighted that Eurex Clearing will be able to offer our clients central clearing from day one of our launch later this year. This agreement is an important step for both businesses on the way to providing CCP-backed SBL transactions.”
Traditionally, securities lending has been an OTC market. However, new international regulatory initiatives (e.g. Basel III) aim to reduce systemic market risk and increase the transparency of the global financial system by increasingly encouraging the central clearing and exchange-trading of OTC transactions.