Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

06 March 2012

FN: Deutsche Börse cash market mulls clearing reform


Germany's Deutsche Börse is exploring the possibility of introducing clearing reforms to its cash equities platform, in a sign of the growing pressure on incumbent exchanges to succumb to rising industry clamour for competition in Europe's clearing market.

The exchange council of Börse Frankfurt, home to the German exchange's cash equities market Xetra, established a working group at the end of last year to explore so-called interoperability - the model whereby multiple clearing houses may clear for a trading platform - according to two sources familiar with the situation.

The council, whose discussions apply only to the Xetra cash markets, is expected to report internally on its findings in the coming weeks, the sources said. A spokesperson for Deutsche Börse confirmed the creation of the working group but declined to comment further.

The development highlights the growing industry pressure on Europe's incumbent exchanges, and in particular Deutsche Börse - the region's third largest cash equities market - to open up their clearing operations.

Exchanges have historically operated an exclusive relationship with a clearing house, meaning brokers have typically been denied a choice over who they clear through. Firms trading on Deutsche Börse's markets must clear through the exchange's clearing house, Eurex Clearing, which does not provide clearing services for any other market.

The model, commonly known as the 'silo', allows the German exchange to optimise the revenues associated with trading on its cash equities and derivatives markets by funnelling all trades through its own clearer. Critics say the silo stymies competition to the German exchange operator by preventing alternative trading venues - whose own businesses would be best served by clearing through the local German clearing house - from accessing Eurex Clearing.

Full article (FN subscription required)



© Financial News


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment