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Europe's changing clearing landscape - EuroCCP 

July 14, 2015


European equities clearing is akin to a European Union in which almost a third of the population can only make a phone call to another party using the same telephone company. Perhaps it is time to accept that there is a better way, writes Diana Chan, chief executive of EuroCCP.

About 30% of equity trades in Europe cleared by central counterparties (CCPs) are cleared through the single CCP mandated by the national stock exchange. But with derivatives likely to be the source of growth and equities clearing not being a major profit generator for these exchanges, they might soon conclude that offering their clients a choice of CCPs would make good business sense. Besides, regulations that compel them to open up to competitive clearing are fast approaching.

The use of CCPs to centrally manage counterparty risk in equities trading was spurred by the widespread introduction in the early 2000s of electronic order books, which remove the trading firms' ability to choose the party they transact with. By 2007, there were nearly 10 CCPs clearing equities in Europe

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