EuroCCP and Omgeo are to develop a pan-European equities central counterparty (CCP) service for hedge fund transactions.
Increasing pressure from regulatory and political bodies concerning the risk associated with OTC derivatives has led to a number of pre-emptive moves by industry participants. LCH.Clearnet has recently unveiled plans for an OTC derivatives clearing service for the buy-side.
The partnership between Omgeo and Euro CCP will be based on Omgeos Central Trade ManagerSM (Omgeo CTM), which services trades from execution through to settlement. Omgeo and EuroCCP expect to conduct pilot testing of the new model this year and aim for a 2010 launch of the service.
The Omgeo/EuroCCP processing solution initially will cover equities in 15 European markets and seven currencies.
Hedge funds will access this CCP solution through Omgeo CTM and through their executing and prime brokers who are EuroCCP Participants. This CCP solution will require no additional technology build-outs or investments by Omgeo CTM customers who are EuroCCP Participants. EuroCCP Participants will be able to access the new service using their existing links to EuroCCP and their existing reports. Clients who use Omgeo CTM will be able to take full advantage of the CCP solutions benefits, which include the elimination of settlement pre-matching and a streamlined infrastructure.
Omgeo and EuroCCP are working with a Brokerage Industry User Group (IUG) to develop the new processing solution.