New EU based venues Brexit

Introduction

In advance of the UK’s proposed exit from the European Union, EuroCCP is working closely with existing UK based trading venues that have established new EU-based entities to continue to serve the needs of their trading members and  their European activity. In its role as an EU based CCP, EuroCCP already offers post-trade clearing services for these UK based venues and will now extending its service offering to their EU-based entities.

To allow participants to continue trading in EU-listed ISINs following Brexit,  Aquis Exchange, Cboe Equities and Turquoise will establish an EU entity for the trading of EU-listed ISINs and continue to operate the UK based platform for trading of UK and Swiss-listed ISINs.

About

Aquis Exchange will establish its EU entity in France and has filed applications with the relevant French competent authorities to operate a multilateral trading facility (Aquis EU). In addition to the current MIC code AQXE (to be used after Brexit for UK and Swiss-listed ISINs), a new MIC code – AQEU – is set up for the EU-listed ISINs.

Cboe  Equities will establish its EU entity in the Netherlands and has filed applications with the relevant Dutch competent authorities to operate a MiFID II compliant equities trading venue (Cboe EU). In addition to the current MIC codes BATE and CHIX (to be used after Brexit for UK and Swiss-listed ISINs), new MIC codes – BEUE and CEUX – is set up for EU-listed ISINs.

Turquoise will establish its EU entity in the Netherlands and has filed applications with the relevant Dutch competent authorities to operate a Multilateral Trading Facility (Turquoise EU). In addition to the current MIC code TRQX (to be used after Brexit for UK, USD and Swiss-listed ISINs), a new MIC code – TQEX – is set up for the EU-listed ISINs.

The service for Aquis EU, Cboe EU and Turquoise EU will be fully interoperable and includes the instruments that are currently available for trading on the UK based platforms. As an EU-based CCP, EuroCCP maximises the operational and commercial benefits for trading and clearing participants, as all trades cleared by EuroCCP will be fully netted into one settlement per ISIN per day. EuroCCP features include:-

  • European based CCP
  • Cross-platform netting
  • Fully interoperable clearing model
  • Incorporated in existing reporting
  • Existing margin methodology applies

Migration approach

The final outcome of Brexit and details of the transition arrangements are currently uncertain, although EuroCCP continues to engage with Clearing Participants to understand their Brexit plans and encourage them to arrange any new  membership applications as early as possible, to ensure a smooth transition.

EuroCCP anticipates that the interoperable arrangements currently in place with Co-CCPs, will continue for the new EU platforms after Brexit.  This approach is subject to change and is dependent of the final Brexit deal.

The go-live approach for the new venues is not yet defined and will be impacted by the final Brexit deal between the European Union and the UK. Given the fact that a number of different transition scenarios are under review and the final approach is not selected, EuroCCP is planning to have the technical set up arranged in the production environment for the three trading venues by 1 March 2019. EuroCCP will continue to closely monitor these developments and is preparing for Brexit together with the trading venues.

Key Dates

Based on the information available today, the following timelines have been defined. These timelines are subject to change and dependent on the evolution of the Brexit negotiations.

Next Steps

Application

EuroCCP will endeavour to have any new Clearing memberships technically ready to go live no less than four weeks prior the agreed live date of the individual platforms. Any requests received after this date will be undertaken on a “best-endeavours”  basis. This extended timeframe is to allow the platforms and EuroCCP to safely manage the high demand of late changes, ensuring a smooth transition.

In order for Clearing Participants and their Trading Participants to be technically ready, EuroCCP will require the following to be completed:-

  • Statement of Authority signed,
  • Netting set up agreed,
  • Standard Settlement Instructions (SSIs) confirmed,
  • Successful testing undertaken,
  • Static data in place.

Technically ready means the above steps have been completed and all parties involved are ready for go-live.

Clearing Participants’ current Statement of Authorities for Aquis UK, Cboe UK and / or Turquoise UK will remain active unless a Termination Statement of Authority is received.

In the event that platforms discontinue to offer trading of EU-listed ISINs on their UK platforms, Clearing Participants must terminate the Statement of Authority for the applicable segments.

Testing

EuroCCP’s client testing environment is available to test trades executed in the test environments of these new platforms.

  • Clearing Participants wishing to test EuroCCP’s service offering for the new platforms should contact EuroCCP Client Testing at clienttesting@euroccp.com prior to commencing testing.
  • Once all test details have been received, EuroCCP will liaise with the platform to ensure the platform and EuroCCP’s test environments are configured accordingly.
  • A list of ISIN codes will be agreed with each Clearing Participant for testing purposes, to ensure a smooth and successful test.
  • EuroCCP‘s testing environment is available on business days on a free of charge basis, from 09:00-17:00 CET, with reporting available thereafter.

Reporting

The new MIC codes for the EU entities of these platforms will be as follows:-

PlatformMIC
Aquis EUAQEU
Cboe EUBEUE, CEUX
Turquoise EUTQEX

These MIC codes will be reflected in EuroCCP’s Clearing Information File (CIF).  During testing, files will be generated and distributed from EuroCCP’s client test environment.

Documentation

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Cboe Europe BV SoA – EU

Version December 2018

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Turquoise MTF SoA – EU

Version December 2018

Contacts

DepartmentContact detailsResponsibilities
Relationship Managementrm@euroccp.com
+44 20 7392 7480
EuroCCP services
EuroCCP pricing
Main point of contact
Client Servicesclientservices@euroccp.com
+44 20 7392 7490
Paperwork
Static data
Connectivity
Reporting
Client Testingclienttesting@euroccp.com
+44 20 7392 7490
Testing
Risk Managementriskmanagement@euroccp.com
+31 20 5703 371
Risk related queries

Newsflashes

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