SecFinex, a European electronic trading platform for equity finance, and LCH.Clearnet, an independent central counterparty, have announced that they will launch central counterparty services for stock borrowing and lending from June next year across the SecFinex Order Market multilateral trading facility for Euronext markets in France, Belgium, the Netherlands and Portugal.
The partners say this is the first time that stock borrowing and lending markets will be able to benefit from central counterparty services, offering market participants reduced risk, complete trading anonymity and operational efficiencies.
The central counterparty-directed trades on the SecFinex marketplace will eliminate bilateral credit risk between lender and borrower, lower the administration costs associated with maintaining multiple credit agreements and significantly reduce the capital required to support stock loan transactions.
The partners say the introduction of LCH.Clearnet's central counterparty services is likely to increase market volumes significantly and enable market participants, through the general clearing arrangements, to access more markets and new counterparties. SecFinex and LCH.Clearnet will launch the revised offering in June 2009.
'Recent market events have highlighted the vital role a central counterparty can play,' says Christophe Hémon, chief executive of LCH.Clearnet. 'This innovative project underlines our desire and capacity to respond to complex and new market expectations, while our users will benefit from increased trading opportunities.'
Peter Fenichel, chief executive of SecFinex, says: 'We are delighted to partner with LCH.Clearnet in this very important evolutionary move to enhance stock borrowing and lending market efficiency, transparency and transaction activity.
'We believe the introduction of a central counterparty in Euronext markets will establish the basis for extending this model across all European markets. The investment and support from NYSE Euronext will position SecFinex as the leader in these key markets and encourage further market developments which will reduce capital requirements and lower risk for borrowers and lenders.'
SecFinex enables more than 40 financial institutions to agree stock loan trades in all major European, US and Japanese equity markets on a price driven system. Traders can hit bids and lift offers on a click and done basis and view current market trading activity in a live screen-based trading environment.
LCH.Clearnet is an independent central counterparty serving international exchanges and platforms, equity, exchange-traded derivatives, energy, interbank interest rate swaps markets and the majority of euro- and sterling-denominated bond and repo markets.