02 December

T2S Migration Wave 4

The migration of the Austrian and German Central Securities Depositories (CSD), to Target 2 Securities (T2S Wave 4) is approaching and is scheduled for the weekend of 4-5 February 2017, with an Initial Settlement Date of  6 February 2017. The purpose of this newsflash is to inform our Clearing Participants of the following information:-

04 November

Successful Implementation of direct link to Norway

Following the successful implementation of EuroCCP’s settlement arrangements in the Norwegian market, EuroCCP is pleased to announce that all settlement instructions with Trade Date 3 November 2016 have been successfully delivered to the Norwegian Central Securities Depository (VPS) by EuroCCP.

Questions & Answers

EuroCCP is a central counterparty (“CCP”) that clears equities traded in Europe. Here are some examples of questions and answers you can find in the Perspectives section:

Where can I find background information on the enhanced Stamp Duty Reserve Tax Assessment Service?

Background information is available on the HMRC website and Euroclear UK and Ireland’s website

What is clearing?

Clearing has many different meanings within the financial markets. In its broadest definition, clearing is a post-trade activity and aims to reduce risk. This often means using a central counterparty (CCP) to eliminate risks associated with the default of a trading counterparty.

In the OTC derivatives markets, ‘bilateral clearing’ means two parties to a trade make their own arrangements to reduce their exposure to each other's default.

What is a CCP?

A CCP  is a corporate entity that provides a guarantee to both parties in a trade that if one party defaulted before the discharge of its obligations, the CCP would fulfil the financial obligations to the remaining party as agreed at the time of the trade. A CCP mitigates replacement cost risk or market risk – that is, the risk that the remaining party has to replace the trade at an unfavorable price.

What services does a CCP provide?

A CCP centralises counterparty risk management and ensures a safe and controlled post-trade process.

A CCP adds value when there is counterparty risk i.e. the possibility that a trading party could become unable to fulfill its obligations, and when there is market risk i.e. the possibility that the price may have moved unfavorably if a trade has to be replaced after a trading party's default.

How do CCPs manage risk?

A central counterparty relies mainly on having sufficient collateral from a clearing participant to cover any losses it might incur if that clearing participant defaulted under normal market conditions. The CCP needs to have access to additional resources if the collateral of the clearing participant is insufficient to cover losses under stress conditions.

"Making the difference in clearing."