The Trading 2 Clearing (Trade2Clear) working group, comprising a number of trading and clearing venues and co-ordinated by SWIFT, has issued practice proposals to enable market infrastructures to develop new links in a standard manner. The group is committed to building on the agreement of the market practice, and is calling on other members of the market infrastructure community to adopt the measures as well.
The recent trend for trading venues to move away from having a single, preferred clearer towards linking to multiple clearers in order to offer customer choice creates potential inefficiencies for trading venues, unless they are able to streamline their connectivity to clearers through standardisation.
The new market practice allows for the reuse of functionality across multiple infrastructures and markets, as well as promoting standardisation, interoperability and greater operational efficiencies efficiencies trading venues can pass on to their customers. Either Financial Information eXchange (FIX) or ISO 15022 syntaxes can be used for the standardized communication, and the proposed solution is completely network-neutral.
The Trade2Clear working group is open to any trading platform or clearing venue. Existing trading venue members include: Burgundy, Chi-X Europe, Equiduct, London Stock Exchange, Nasdaq OMX Europe and Turquoise. Existing members from the clearing venue and related routing and netting engine provider community include: EMCF, EuroCCP, LCH.Clearnet Group, Monte Titoli and SIX x-clear.
The agreed market practice specifies how to create a link between a trading venue and a clearing venue, and can be applied either to create a single link, or links to multiple clearers. So far, the guidelines apply to the equities markets. There is the potential to extend them to cover fixed income and other asset classes as well.
Trade2Clear working group members comment:
Chi-X Europe fully supports the efforts by SWIFT to encourage industry collaboration towards common standards for market infrastructures. We have been actively engaging with the CCPs to encourage greater interoperability in favour of providing greater choice for our trading participants, and will continue to support community initiatives such as these, says Hirander Misra, COO of Chi-X Europe.
This initiative led by SWIFT is fully aligned with EuroCCPs objective to increase efficiency and reduce risks for the market. Were pleased that SWIFT has successfully brought together the trading and clearing communities to improve the way we work, says Trevor Spanner, COO of EuroCCP.
As the leading independent central counterparty group in Europe, LCH.Clearnet continues to show its willingness to play a key role in the harmonisation and standardisation of processes and messaging in Europe, demonstrating its determination to bring further efficiencies to the markets it serves, says Pierre-Dominique Renard, director, Customer, Market & Infrastructure, LCH.Clearnet SA.
European markets are becoming increasingly fragmented and with the onset of interoperability it is important to ensure that market participants can maintain their operational efficiencies, says Todd Golub, COO of Nasdaq OMX Europe.
Significant strides have been made in interoperability this year, and the proposals the Trade2Clear group has developed are aimed at delivering and enhancing the benefits that interoperability will bring to end users. Turquoise will continue to collaborate with the industry on harmonising message flows, in order to improve efficiencies across market infrastructures and offer participants more effective ways ofTrading, says Adrian Farnham, COO of Turquoise.
L.D.