Major trading and clearing venues work with SWIFT to streamline connectivity

SWIFT facilitates market practice agreement among Chi-X, London Stock Exchange, LCH.Clearnet, EuroCCP and others

LA HULPE, 2 July 2009 – More efficient communication between securities trading and clearing venues has received a significant boost with the agreement and publication of market practice measures designed to standardise the exchange of electronic information between them.

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 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.

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.

Trade2Clear working group members comment:

Hirander Misra, COO of Chi-X Europe: “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 to encourage greater interoperability in favour of providing greater choice for our trading participants, and will continue to support community initiatives such as these.”

Trevor Spanner, COO of EuroCCP: “This initiative led by SWIFT is fully aligned with EuroCCP’s objective to increase efficiency and reduce risks for the market. We’re pleased that SWIFT has successfully brought together the trading and clearing communities to improve the way we work.”
Pierre-Dominique Renard, Director, Customer, Market & Infrastructure at LCH.Clearnet SA: “As the leading independent central counterparty group in Europe, LCH.Clearnet continues to show its willingness to play a key role in the harmonisation and standardisation of processes and messaging in Europe, demonstrating its determination to bring further efficiencies to the markets it serves.”

Todd Golub, COO of Nasdaq OMX Europe: “European markets are becoming increasingly fragmented and with the onset of interoperability it is important to ensure that market participants can maintain their operational efficiencies.”

Adrian Farnham, COO of Turquoise: “Significant strides have been made in interoperability this year, and the proposals the Trade2Clear group has developed are aimed at delivering and enhancing the benefits that interoperability will bring to end users. Turquoise will continue to collaborate with the industry on harmonising message flows, in order to improve efficiencies across market infrastructures and offer participants more effective ways of trading.”
The market practice document can be downloaded at www.swift.com.

Note to Editors :

About SWIFT
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect over 8,500 banking organisations, securities institutions and corporate customers in more than 200 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.

For more information about this press release, please refer to www.swift.com or contact the SWIFT press office:

Euan Sellar
SWIFT
+32 2 655 3243
Email: euan.sellar@swift.com