Bclear is the new web-based, on-exchange administration and clearing service that provides a simple way to register and process wholesale trades through Euronext.liffe to clearing at LCH.Clearnet Ltd, reducing the counter-party credit, legal and operational risks associated with off-exchange deals. Bclear will enable registration of both ‘standard exchange’ and ‘flexible’ trades in futures and options covering 12 country and pan-European indices and over 300 underlying European securities from 15 markets.
At the same time, Euronext.liffe will go live with a secure, automated straight-through processing (STP) link between Cscreen, the pre-trade price discovery platform acquired by Euronext.liffe in April and Bclear. Bclear will offer an innovative, low cost fee schedule for the booking of wholesale equity derivative transactions.
Later this year Euronext.liffe will introduce another service Afirm which is geared towards providing operational efficiency for equity derivatives business conducted ‘off-exchange’. Afirm will also be linked into Cscreen providing users with a simple but efficient choice between conducting their business on- or off-exchange.
Euronext.liffe’s chief executive, Hugh Freedberg, said: “After our purchase of Cscreen earlier this year, Bclear provides a low cost way of booking and managing large equity derivative positions without the operational, credit and legal risks traditionally associated with transacting such business in the OTC market. Cross-border trading of equity derivatives will now become a great deal simpler and more cost effective.”
John Serocold, a director of the London Investment Banking Association (LIBA), said: “LIBA members will welcome any innovation of this type that has the potential to reduce costs and mitigate operational risks. I have also been impressed with the way Euronext.liffe has understood users' needs and acted on that understanding. LIBA will continue to welcome and encourage dialogue with exchanges on these and other topics.”
Background
- The current cost of subscription to Cscreen will remain the same, and customers can benefit from a rebate of their subscription against business they transact through either Bclear, or the third service, Afirm, which will be launched later this year.
- Besides the wide range of products on offer, and the simplicity of the new service, Bclear offers customers a number of other advantages. Publication of trade details is optional and there is no requirement for customers to reveal their name to their counterparty as there is with traditional OTC trades, nor any obligation to trade out with the same counterparty. Futures and options in both standard and flexible wholesale equity derivatives trades are accepted through Bclear, including strategy trades, portfolio trades and delta-neutral (stock contingent / volatility) trades. All open positions are marked to market daily and open interest in contracts available both through Bclear and Euronext.liffe London will be pooled so that trades opened via trading on LIFFE CONNECT® can potentially be closed through Bclear, and vice versa.
- The OTC market for equity derivatives has grown rapidly in recent years, and is now estimated to be about three times the size of the on-exchange market.
- Full details of the fee structure can be found on Euronext.liffe’s website at www.euronext.com/bclear
- The go-live date for Afirm will be announced shortly. Afirm will offer affirmation or matching as a route to confirmation for OTC equity derivatives transactions.
- The London Investment Banking Association (LIBA) is the principal trade association in the United Kingdom and Europe for firms active in the investment banking and securities industry. It represents the London offices of investment banks from around the world. The Association represents the interests of its Members on all aspects of their business and promotes their views to the authorities and others in the United Kingdom, the European Union and elsewhere. LIBA supports competition between exchanges.