The Trading 2 Clearing (Trade2Clear) working group, comprising a number of leading trading and clearing venues and co-ordinated by SWIFT, has issued best practice proposals to enable market infrastructures to develop new links in a standard manner. The group is committed to building on the agreement of the market practice, and is calling on other members of the market infrastructure community to adopt the measures as well.
The agreed market practice specifies how to create a link between a trading venue and a clearing venue, and can be applied either to create a single link, or links to multiple clearers. So far, the guidelines apply to the equities markets. There is the potential to extend them to cover fixed income and other asset classes as well.
The recent trend for trading venues to move away from having a single, preferred clearer towards linking to multiple clearers in order to offer customer choice creates potential inefficiencies for trading venues, unless they are able to streamline their connectivity to clearers through standardisation.
The new market practice allows for the reuse of functionality across multiple infrastructures and markets, as well as promoting standardisation, interoperability and greater operational efficiencies – efficiencies trading venues can pass on to their customers. Either Financial Information eXchange (FIX) or ISO 15022 syntaxes can be used for the standardised communication, and the proposed solution is completely network-neutral.
The Trade2Clear working group is open to any trading platform or clearing venue. Existing trading venue members include: Burgundy, Chi-X Europe, Equiduct, London Stock Exchange, Nasdaq OMX Europe and Turquoise. Existing members from the clearing venue and related routing and netting engine provider community include: EMCF, EuroCCP, LCH.Clearnet Group, Monte Titoli and SIX x-clear.
Hirander Misra, chief operating officer (COO) of Chi-X Europe, said: “Chi-X Europe fully supports the efforts by SWIFT to encourage industry collaboration towards common standards for market infrastructures. We have been actively engaging with the CCPs [central counterparties] to encourage greater interoperability in favour of providing greater choice for our trading participants, and will continue to support community initiatives such as these.”
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