Shearman & Sterling advises SIX x-clear
19 May 2011 London
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Shearman & Sterling has advised SIX x-clear AG (x-clear), a subsidiary of SIS Swiss Financial Services Group AG, on its arrangements to become an interoperable clearing house and central counterparty alongside LCH.Clearnet Limited.
The FSA has recently approved the new clearing arrangements following a long period of intense scrutiny of the risk management and collateral arrangement between the two clearing houses to ensure that the arrangements adequately address and cater for any increased systemic risk. The arrangements are the first to be given the green light by regulators and are a significant step in the development of interoperable clearing arrangements in the cash markets in Europe.
The new arrangements will allow a choice between the two clearing houses when trading on various equity markets in Europe. Previously, firms had to use the clearer chosen by the exchange or platform on which they were trading. This is consistent with the regime envisaged under the European Markets and Infrastructure Regulation which contemplates establishing a pan-European framework for interoperable arrangements between central counterparties. These developments will be welcomed by trading firms and other market participants because of the resulting lower transaction costs for their businesses due to the increased competition in clearing.
The Shearman & Sterling lawyers advising x-clear were Financial Institutions Advisory & Financial Regulatory Group partner Barney Reynolds and counsel Azad Ali in the firm's London office.
The FSA has recently approved the new clearing arrangements following a long period of intense scrutiny of the risk management and collateral arrangement between the two clearing houses to ensure that the arrangements adequately address and cater for any increased systemic risk. The arrangements are the first to be given the green light by regulators and are a significant step in the development of interoperable clearing arrangements in the cash markets in Europe.
The new arrangements will allow a choice between the two clearing houses when trading on various equity markets in Europe. Previously, firms had to use the clearer chosen by the exchange or platform on which they were trading. This is consistent with the regime envisaged under the European Markets and Infrastructure Regulation which contemplates establishing a pan-European framework for interoperable arrangements between central counterparties. These developments will be welcomed by trading firms and other market participants because of the resulting lower transaction costs for their businesses due to the increased competition in clearing.
The Shearman & Sterling lawyers advising x-clear were Financial Institutions Advisory & Financial Regulatory Group partner Barney Reynolds and counsel Azad Ali in the firm's London office.
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