SecFinex Limited, the European electronic trading platform for equity finance, and LCH.Clearnet, the European independent central counterparty (CCP), will be working together to launch central counterparty services for stock borrowing and lending across the SecFinex Order Market multilateral trading facility for Euronext markets. This will include stock loan transactions in France, Belgium, The Netherlands and Portugal.
This is the first time that stock borrowing and lending markets will be able to take advantage of the services offered by a central counterparty. Market participants will benefit from reduced risk, complete trading anonymity and operational efficiencies.
The CCP directed trades on the SecFinex marketplace will eliminate bi-lateral credit risk between lender and borrower, will lower the administration costs associated with maintaining multiple credit agreements and will significantly reduce the capital required to support stock loan transactions. The introduction of LCH.Clearnet’s CCP services is likely to increase market volumes and will enable market participants, through the general clearing arrangements, to access more markets and new counterparties.
SecFinex and LCH.Clearnet will launch the revised offering in June 2009. Both user groups and investment organisations have been widely consulted in planning the service to ensure it meets users’ needs.
“Recent market events have highlighted the vital role a CCP can play,” says Christophe Hmon, CEO of LCH.Clearnet SA. “We are delighted to be working with SecFinex on this innovative project. It underlines our desire and capacity to respond to complex and new market expectations, whilst our users will benefit from increased trading opportunities.”
“We are delighted to partner with LCH.Clearnet in this very important evolutionary move to enhance SBL market efficiency, transparency and transaction activity,” says Peter Fenichel, CEO of SecFinex. “We believe the introduction of a CCP in Euronext markets will establish the basis for extending this model across all European markets. The investment and support from NYSE Euronext will position SecFinex as the leader in these key markets and encourage further market developments which will reduce capital requirements and lower risk for borrowers and lenders.”
D.C.