Pan-European cash equities clearinghouses EMCF and EuroCCP will combine to form a new central counterparty (CCP).
The current owners of EMCF—ABN AMRO Clearing Bank and NASDAQ OMX—and current owner of EuroCCP—the Depository Trust & Clearing Corporation (DTCC)—along with BATS Chi-X Europe, have entered into a memorandum of understanding to become equal shareholders in the new combined clearinghouse.
The deal is expected to be completed once the necessary regulatory approvals are received.
The new CCP will use the risk management framework and customer-service organisation of EuroCCP, and it will run on the technology and operations infrastructure of EMCF.
The new entity, to be called EuroCCP, will be headquartered in Amsterdam, with client-facing functions located in London and Nordic coverage provided from Stockholm.
The future shareholders intend to appoint Diana Chan, who is CEO of EuroCCP, to the same role in the new entity. Jan Booij, who is CEO of EMCF, will become COO.
In a statement, Chan said: “Bringing together EMCF and EuroCCP reflects the desire of many market participants to see sustained competition, consolidation and greater efficiencies in European clearing and post-trade processing.”
Booij said: “This is not only a transformational initiative for EMCF and EuroCCP but for the industry. It will enable us to provide more flexible and innovative clearing services to all clients, while our sustainable business model will ensure costs are kept low and will provide the very best in risk management, technology, settlement and client service.”
Chan added: “The new CCP will lead the way in encouraging greater competition between all cash equity clearing houses while driving down costs. Following the launch of four-way interoperability, the industry must now consolidate in Europe to achieve economies of scale and respond to the changing needs of market participants. Combining our organisations will accomplish this.”
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