SecFinex, a European electronic trading platform for equity finance owned by NYSE Euronext, and SIX x-clear, a licensed Swiss bank, have agreed to launch central counterparty services for
SecFinex, a European electronic trading platform for equity finance owned by NYSE Euronext, and SIX x-clear, a licensed Swiss bank, have agreed to launch central counterparty services for stock borrowing and lending across the SecFinex Order Market multilateral trading facility for key European markets.
The agreement will cover stock loan transactions in Austria, Denmark, Finland, Germany, Norway, Sweden and Switzerland. Once the initial phase of the project is launched, SecFinex and SIX x-clear plan to extend services to additional European markets.
The service will enable stock borrowing and lending markets in these countries to take advantage of the services offered by a central counterparty, which are already available for equity finance in the Euronext markets of Belgium, France, the Netherlands and Portugal. The partners say market participants will benefit from reduced risk, complete trading anonymity and operational efficiencies.
Central counterparty-directed trades in the SecFinex marketplace will eliminate bilateral credit risk between lender and borrower and will significantly reduce the capital required to support stock loan transactions, they argue, predicting that SIX x-clear’s central counterparty service will significantly increase market volumes and enable market participants, through general clearing arrangements, to access more markets and new counterparties.
SecFinex and SIX x-clear anticipate a launch of the initial phase of the central counterparty marketplace in the second quarter of 2009. User groups and investment organisations have been consulted in planning the service to ensure it meets users’ needs.
‘We are very pleased to work with SecFinex and provide clearing services in an important market where the need to mitigate risk is paramount,’ says SIX x-clear chief executive Marco Strimer. SecFinex has ambitious plans for European growth and we are delighted to partner with them and share our market knowledge and expertise.
‘Given current economic conditions there has never been a bigger appetite for cleared infrastructure. We look forward to continuing to provide the associated benefits of reduced risk in trading activity across whichever markets our clients request.’
SecFinex chief executive Peter Fenichel says: ‘The agreement complements a broader effort to bring positive changes to the equity finance markets. We believe the SecFinex marketplace, linked to SIX x-clear, will provide our clients with significant advantages that will reduce capital requirements, lower risk for borrowers and lenders and broaden participation in current difficult markets.’
SecFinex is an online marketplace for securities lending that enables participants to agree stock loan trades anonymously with each other on a price-driven system. Through SecFinex electronic platforms, securities financing professionals can execute trades in European, US and Japanese equity markets. The firm serves more than 40 financial institutions, a cross-section of lenders, borrowers and intermediaries. SIX x-clear is part of Swiss Financial Market Services, the central counterparty for SWX Europe and SWX Swiss Exchange.
