NASDAQ OMX postpones introduction of competitive Central Counterparty clearing in the Nordics
Stockholm, March 26, 2012 – NASDAQ OMX Nordic, part of The NASDAQ OMX Group Inc. (NASDAQ:NDAQ), today announces that they will postpone the introduction of competitive clearing in the Nordic cash equity markets, beyond the targeted April 2012 timeline, as announced in October 2011.
Hans-Ole Jochumsen, President of NASDAQ OMX Nordic said: “NASDAQ OMX has strived to pursue a competitive cash clearing model since 2009, when we first announced our intent. We are convinced that it will act to drive liquidity and lower investor costs, thus benefiting our clients and the European capital market as a whole. However, there is still uncertainty regarding the detailed requirements for interoperability even though there is a political agreement regarding EMIR. There needs to be clarity and a level playing field in this area, before we can introduce interoperability.”
The principle on interoperability for cash equities in EMIR, the European Markets Infrastructure Regulation, have been agreed on a political level, but there are still issues outstanding. ESMA, the European Securities and Markets Authority, will draft technical standards, in cooperation with ESCB, European System of Central Banks, by 31 December 2012.
Work is also on-going to update the recommendations from CPSS-IOSCO, the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions i.e. “CPSS-IOSCO principles for financial market infrastructures”. When finalized, the new principles will replace the three existing sets of CPSS and CPSS-IOSCO standards, the Core principles for systemically important payment systems (2001); the Recommendations for securities settlement systems (2001); and the Recommendations for central counterparties (2004). The proposal is that relevant authorities will then strive to include the principles in their legal and regulatory framework by the end of 2012.
The EMIR and ESMA guidelines supersede the code of conduct on matters that they will govern but it will be necessary to determine interaction with the remaining parts of the code.
Additional EU legislation, for example MiFIR, the Markets in Financial Instruments Regulation, is in the pipeline and the interaction between those and EMIR and the Code of Conduct should be managed in a coordinated way.
Central Counterparty Clearing and Interoperability
Central counterparty clearing involves the legal transfer of obligations to a central counterparty, which becomes the buyer to the seller and the seller to the buyer. With the introduction of a CCP counterparty the risk that one party to a trade suffers losses because the other party cannot fulfill its obligations is mitigated since the CCP is specifically designed to handle counterparty risks.
Interoperability between CCPs allows market participants to choose the CCP they prefer to use, thus increasing competition. CCP interoperability also enables cross netting of trades for firms that use the same CCP for transactions executed on different trading venues, which enables cost savings for example from fewer settlements and simpler operations.
About NASDAQ OMX
The inventor and transformer of the electronic exchange, The NASDAQ OMX Group, Inc., fuels economies with revolutionary technologies for the entire lifecycle of a trade - from risk management to trade to surveillance to clearing. In the US and Europe, we own and operate 24 markets, 3 clearinghouses and 6 central securities depositories supporting equities, options, fixed income, derivatives, commodities, futures and structured products. Able to traffic more than 1 million messages per second at sub-80 microsecond speeds with 99.999% uptime, our technology drives more than 70 exchanges in 50 developed and emerging countries into the future, powering 1 in 10 of the world’s securities transactions. Our award-winning data products and worldwide indexes are the benchmarks in the financial industry. Home to 3,400 listed companies worth $5.1 trillion in market cap whose innovations shape our world, we give the ideas of tomorrow access to capital today. Welcome to where the world takes a big leap forward, daily. Welcome to the NASDAQ OMX Century. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius.
To learn more, visit www.nasdaqomx.com. Follow us on Facebook (http://www.facebook.com/NASDAQ) and Twitter (http://www.twitter.com/nasdaqomx). (Symbol: NDAQ and member of S&P 500)
Cautionary Note Regarding Forward-Looking Statements
The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about NASDAQ OMX's products and offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to factors detailed in NASDAQ OMX's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.
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