The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced a new roadmap for its Nordic equity market to further strengthen the functionality and liquidity of the market for the benefit of all market participants. The key moves include:
* the introduction of a central counterparty clearing (CCP) mechanism for cash equity trading
* a 20 percent discount to be offered on the variable part of the trading fee to all CCP cleared trades,
* a new trading platform
* order routing functionality
"As the operator of the leading market for equity trading in the Nordics, we want to increase market liquidity and further strengthen our ability to compete in the new European trading landscape. These important initiatives are designed to drive the development and increase the attractiveness of the Nordic equity market on a variety of fronts. We will deliver important customer benefits including reduced latency and transaction costs, straightforward cross-border trading, and a cost and risk-efficient clearing model," said Hans-Ole Jochumsen, Executive Vice President, NASDAQ OMX.
NASDAQ OMX will introduce a CCP solution for the cash equity markets on its exchanges in the Nordics. Optional CCP clearing will be offered from January 2009. Full CCP clearing is planned to be in effect from June 2009. A Memorandum of Understanding has been signed with European Multilateral Clearing Facility N.V. (EMCF) to deliver the clearing services. EMCF currently provides clearing services for many of the rapidly growing MTF marketplaces, including NASDAQ OMX Europe. In a separate news release NASDAQ OMX today announced that NASDAQ OMX also have entered into an agreement to acquire an equity stake in EMCF. NASDAQ OMX intention to use EMCF as a supplier of the clearing services to the Nordic markets is dependent on closure of the agreement to acquire an equity stake in EMCF. The CCP introduction is subject to regulatory approval.
NASDAQ OMX will implement a new trading platform in Q4 2009 placing all NASDAQ OMX equity markets on INET technology. The new platform will further improve efficiency, reduce latency and increase throughput. Additionally, a new market structure will be developed to meet the needs of the Nordic and Baltic markets, as well as to better accommodate the new trading environment under the Markets in Financial Instruments Directive.
Order routing functionality between NASDAQ OMX's Nordic Market and NASDAQ OMX Europe will be introduced by Q4 2009, giving Nordic market participants the possibility to trade all securities traded on NASDAQ OMX Europe. The introduction of order routing is subject to regulatory approval.
Note to editors on the CCP solution:
A CCP solution implies that for each and every trade conducted, the CCP enters as a buyer to the seller and as a seller to the buyer, i.e. the CCP acts as an intermediary between the buying and selling parties. In this way, CCP reduces counterparty risk, which is the risk that one party in a transaction will not be able to fulfill its obligations in due time. The CCP guarantees that payment and securities are exchanged efficiently at minimum risk to the parties involved.
The reasons for introducing a central counterparty mechanism on the Nordic market are to put in place a better model for handling counterparty risk, to remain competitive in the current European trading landscape, and to ensure efficiency through the whole transaction chain.
The CCP solution will be tailored to local customer needs. To limit the overflow of risk from trading activities at other markets serviced by EMCF, a separate clearing fund will be created, a new membership type for local clearing participants will be established, and Nordic securities will be accepted as collateral.
Optional CCP clearing will be offered as an interim solution from January 2009 whereby parties opting to clear can clear all trades with each other. Self clearing functionality (internalization) will be made available in parallel and will continue to be offered once the full CCP clearing has been launched. The full CCP clearing solution is planned for June 2009. The final plan for implementation will be decided following member consultations. NASDAQ OMX will also be open to other CCP providers in line with the intention in the European Code of Conduct on Clearing and Settlement. -- www.nasdaq.com
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