European Central Counterparty Ltd. (EuroCCP) increases the number of approved clearing participants to 21 adding Skandinaviska Enskilda Banken AB and Santander Investment Services S.A.
Eleven participants of EuroCCP are general clearing participants who clear for themselves and other trading firms who are not EuroCCP participants. The remaining firms are individual participants who clear only their own trades.
According to Diana Chan, CEO of EuroCCP, the participation standards are high compared with other clearing organizations in Europe. They are very strict. . As a participant of EuroCCP, firms are required to meet rigorous financial requirements, including minimum levels of capital and financial performance standards. After being approved by EuroCCP’s risk management and participation departments, each prospective participant firm must also be reviewed and approved by a committee of the board of directors as well.
Participant firms are required to put up collateral with EuroCCP that can be used in the event a participant firm is unable to fulfill its settlement obligations. Collateral can be cash, government securities or letters of credit from approved banks. The level of collateral is adjusted on a daily basis.
Such rigorous participation requirements were set in consultation with the first firms who intended to join EuroCCP and in line with the EuroCCP user-governed business model. Trading firms that do not meet the requirements, or which for operational reasons prefer not to have direct participation, can choose to through one of the general clearing participants, and about 40 trading firms currently clear through EuroCCP using general clearing participants.
Our volume and the number of participants using EuroCCP has continued to grow, and we are continuing to look at expanding the markets and securities we clear and settle, says Diana Chan. “The debut of both SmartPool and the high frequency trading platform NYSE Arca Europe in the first quarter of 2009 will also bring more volume and participants into EuroCCP.”
L.D.