The implementation has been approved by the Bank of Spain.

Specifically, the new system improves efficiency and reduces risks in FX transactions – an advantage over bilateral settlement, according to the exchange, wherein one counterparty faces the loss of the total transaction amount if the other does not deliver the sold currency. 

The offering is also set to reduce the reliance on credit lines, thus increasing both the number and volume of potential counterparties. 

José Manuel Ortiz, head of securities services (interim), said: “We are convinced that our neutral position as an operator of financial markets and the robustness of our technical infrastructure will allow us to offer a high-quality and highly available service to participants. 

“The implementation of the FXS service represents an important step towards greater efficiency and security in foreign exchange transactions in Europe.” 

Read more: BME implements new reform to bolster Spanish settlement system

FXS also offers potential for integration of the service into the SWIFT network and netting of all transactions between two counterparties.

Once live, the system will be available to financial institutions across the EU and Switzerland.

Going forward, BME confirmed that it is also working on other initiatives aimed at increasing its presence across the FX landscape.

The post BME unveils new FX settlement system appeared first on The TRADE.

José Manuel Ortiz

Coordinated by Iberclear, the new settlement model has come into force following the approval of Law 6/2023, on Securities Markets and Investment Services, and Royal Decree 814/2023. 

The law removes the obligation for the central securities depository (CSD) to have an information system for the supervision of trading, clearing, settlement, and registration of negotiable securities, as a required component for the traceability of operations on negotiable securities from trading to their final settlement. 

The removal of this information system will eliminate the need to simultaneously link the management of the registry with the settlement process, helping reduce operational risks and costs associated with post-trade processes.  

This change is expected to increase efficiency in the settlement of securities, simplify operational processes, and reduce the volume of failed operations on their theoretical settlement date. 

In addition, the implemented changes will enable the Spanish market to comply with the European standard of matching criteria, known as Party 2.  

Adopting this standard facilitates the interoperability of the Spanish market with the rest of Europe, which as a result, aligns settlement processes with European practices.  

The Spanish securities market will also be harmonised, improving operational efficiency and increase its competitiveness by reducing barriers to cross-border investment and settlement. 

The change will also prepare the Spanish market for the transition to the T+1 settlement cycle, expected to be implemented in Europe in October 2027. This migration claims to reduce risks by improving market efficiency.  

Read more: EU watchdogs launch new governance structure to support T+1 transition 

“The implementation of this reform has been a joint effort of the entire industry. The collaboration and commitment of all stakeholders have been key to the success of the project, as well as the involvement and participation of the CNMV,” said José Manuel Ortiz, head securities services a.i., at SIX. 

“We are very satisfied with the boost to the efficiency and competitiveness of the Spanish capital markets and their settlement system that this reform brings.” 

The post BME implements new reform to bolster Spanish settlement system appeared first on The TRADE.

Iván Lorenzo

Specifically, SpainAtMid, going live today, enables Spanish market securities to be executed at the midpoint of the bid-ask spread.

Key benefits of the offering according to stakeholders include high liquidity, better execution price and security.

Iván Lorenzo, product manager, equity product at BME, said: “SpainAtMid has been developed to meet the growing demand from our clients for non-displayed execution in Spanish securities. In Switzerland, SwissAtMid had been introduced in 2016 and fundamentally reshaped the trading landscape for Swiss Equities. 

“With our extensive experience in this area in the Swiss market, we believe we are well placed to offer this option in Spain.” 

SpainAtMid will operate on the same atomic matching cycle as BME’s central order book, available during the continuous trading phase. 

Users’ market and limit orders will interact with SpainAtMid either directly or else orders can be flagged to be routed firstly to SpainAtMid – ‘sweep’.

In all cases, orders can have various conditions, including ‘execute or cancel’ or ‘minimum volume’.

Lorenzo added: “By emulating this successful setup on the BME Exchange, SIX enables clients to benefit from the ongoing integration and knowledge exchange between its two home markets, Switzerland and Spain. And we are convinced that concentrating more liquidity on our exchanges is beneficial for all trading participants.”

The post SIX’s BME unveils new dark pool appeared first on The TRADE.

EuroCTP is a project which arose in response to the European Commission’s previously published proposal for an equities tape and aims to tender as the CT provider in the EU’s future selection process.

In the initial announcement declaring the exchanges’ intention to collaborate on a CT back in February, EuroCTP asserted that “the participants are recognised specialists in supplying reliable and high-quality market data and are well-positioned to deliver a CT quickly, efficiently, and to the highest operational standards”.

A CT, across the various asset classes, has been the subject of much debate in the market for some time, with regulators currently welcoming feedback from participants on what shape the final framework should take, both in the EU and the UK.

Speaking to The TRADE, Natan Tiefenbrun, president of Cboe Europe (not a shareholder in EuroCTP), highlighted some key points of consideration: “Our focus remains on ensuring the legislation – still under negotiation – will mandate a consolidated tape that meets the needs of consumers, including essential information from intraday and closing auction phases, is priced to succeed, and fairly rewards all data contributors.”

He added: “Only a tape with these characteristics will lower barriers to participation and support competition and growth in European equity markets. We continue to see members of the exchange consortium pushing in the opposite direction.”

Read more: Battle lines are drawn over European consolidated tape project

In April, five major buy- and sell-side institutions (Barclays, BlackRock, Crédit Agricole CIB, Société Générale and UniCredit) announced their intention to jointly explore the establishment of a consolidated tape for equities and ETFs. In the same statement, the institutions confirmed that they supported the current proposals to include pre-trade data.

The EuroCTP JV is made up of participants across 26 of the EU’s member states and includes: BME, Deutsche Boerse Group, Euronext exchanges (Borsa Italiana, Amsterdam, Brussels, Dublin, Lison, Paris, Oslo Børs), Luxembourg Stock Exchange, and Nasdaq exchanges (Stockholm, Copenhagen, Helsinki, Iceland, Riga, Tallinn, and Vilnius), among others.

The shareholders of EuroCTP are operators of regulated markets and have confirmed their intention to ensure the long-term success of both market participants and retail investors, aiming to maintain and strengthen the European capital market ecosystem. 

The company is set to appoint a board of directors, as well as ensuring that a representative of all the participating exchanges are included in a supervisory board. Jorge Yzaguirre Scharfhausen has been elected chair of that supervisory board, with the chief executive of the business to be announced soon.

Speaking in an announcement, Yzaguirre Scharfhausen said: “The initiative that has led to the creation of EuroCTP is a true representation of European capital markets and shows a broader range of interests than any other consolidated tape proposal, its aim is to strengthen the EU Capital Market Union.

“We are proud to be the first European consolidated tape initiative for equities and ETFs to have established a company. We are now working on the best solution for the provision of a consolidated tape in the European Union.”

EuroCTP explained that the development of the new company has been in the works for more than a year with shareholders having already made ‘significant investments’ and confirming their commitment to fully financing both the development and implementation of the CT.

The post European exchanges launch JV for CTP tender appeared first on The TRADE.

Following SIX’s acquisition of BME for €2.8 billion in June 2020, the exchange confirmed in June the following year that it intended to migrate trading and trading services for equities, fixed income and equity-like instruments to the SIX platform, alongside market data dissemination for both Swiss and Spanish markets, to generate synergies following the deal.

The migration, which did not include derivatives trading and services, was originally expected to be completed between the fourth quarter of 2022 and the second quarter of this year. As part of the project, the Spanish market would continue to be hosted in Madrid and the Swiss market in Zurich.

Read more – SIX to consolidate Swiss and Spanish exchange trading platforms

Speaking to The TRADE in September last year, SIX chief executive officer Jos Dijsselhof said: “We want to benefit from integration of technology and corresponding investments, so we will migrate the Spanish trading platform onto the same system as we now use for the Swiss market. We’re going through the whole value chain to see what we can integrate.”

However, a spokesperson from SIX told The TRADE on Wednesday that following months of dedicated planning the consolidation project has been suspended and will be winding down in an “orderly fashion”.

“This very comprehensive preparatory work has now shown that the envisaged consolidation would be more complex than initially expected, especially in technological and legal matters,” a spokesperson from SIX told The TRADE. 

The exchange confirmed it will now be focusing on alternative routes to the consolidation synergies including potential renewal strategies on both bourses’ existing assets. 

“For them [members], there are no changes or consequences – we were only doing comprehensive preparatory work so far. Members will benefit as we will now focus on strategy and investment roadmaps to support the overall growth, excellence and efficiency targets,” a SIX spokesperson told The TRADE.

The post SIX scraps multi-year BME trading platform integration plans due to unexpected complexity appeared first on The TRADE.

Despite total operating income rising 8.9% to CHF 1,498.3 million for 2021, group net profit fell 83% to CHF 73.5 million while earnings before interest and tax (EBIT) also fell 71% to CHF 147.2 million.

The exchange attributed the “substantial decreases” to the opposing effects of “one off” events to do with Worldline share prices last year and in the year prior.

In 2020, SIX partially sold shares in Worldline, while the payment and transactional services company’s merger with payment services provider Ingenico also had a “highly positive effect on the 2020 net financial result” increasing both group net profit and EBIT at SIX.

However, this was followed by Worldline’s share profit being heavily impacted by the announcement of the sale of its Terminals, Solutions & Services (TSS) in 2021 and this subsequently contributed CHF 102.1 million to “the share of profit and loss of associates of SIX”.

“The year before SIX had sold part of the Worldline shares in 2020, which had had an extremely positive effect on the financial result (+274 million Swiss francs). This effect was now absent in 2021,” Daniel Schmucki, SIX Group chief financial officer, told The TRADE.

SIX added that without the effects of Worldline, the exchange would’ve seen its group net profit rise by over a third.

“Because of the high egg effects from the participation in the past two years, it makes sense to look at the adjusted profit,” added Schmucki.

The exchange has set out plans for 4% growth over the next two years, fuelled by cost reductions and by leveraging its synergies with the now wholly integrated BME – this year was the first time to Spanish business contributed for an entire year – alongside the three other acquisitions made by SIX in 2021.

“Given the rapidly evolving state of industry consolidation, M&A has remained key to strengthening the competitive position in core offerings as well as helping improve margins and acquiring additional capabilities and technologies,” the exchange said in its report.

The post SIX attributes “substantial” non-operating losses to “one off” Worldline share price fluctuations appeared first on The TRADE.

Trading and trading services for equities, fixed income and equity-like instruments will be migrated to the SIX platform, alongside market data dissemination for both Swiss and Spanish markets.

The migration, which will not include derivatives trading and services, is expected to be completed between the fourth quarter next year and the second quarter in 2023. The Spanish market will also continue to be hosted in Madrid and the Swiss market will be hosted in Zurirch.

“This is an important step in the integration of BME into SIX. Our Spanish and Swiss teams are working closely together on the best approach to this transition and are evaluating how to most effectively support activities and ensure member conversion,” said Thomas Zeeb, global head of exchanges at SIX and member of the executive board.

“This migration ensures that the market gets to benefit from an enhanced trading platform, extended capabilities, new functionalities as well as simplified and improved systems and technology.”

SIX completed its €2.8 billion acquisition of BME in June last year and confirmed it had started planning the integration of the Spanish market two months later. The exchange operator said the integration would be a priority and focus for the firm throughout this year.

The plan to consolidate the Spanish and Swiss exchange platforms are subject to regulatory approval. SIX will keep Spain’s National Securities Market Commission (CNMV) updated on the integration progress and a consultation with market participants will begin to refine the scope of the project.

The post SIX to consolidate Swiss and Spanish exchange trading platforms appeared first on The TRADE.

Spanish exchange operator Bolsas y Mercados Españoles (BME) has expanded its list of fixed income clearing members with the addition of Italian investment bank UniCredit.

UniCredit has reached an agreement with BME’s central counterparty (CCP), BME Clearing, to become a new operating member in the fixed income segment.

BME confirmed that with the addition of UniCredit, its CCP now has 25 clearing members including other major European banks such as Societe Generale, Credit Agricole, and Banco Santander. UniCredit marks BME Clearing’s third international counterparty from 15 April. 

“The agreement with UniCredit SpA is the result of close cooperation and we expect it will lead to higher volumes in this segment,” said José Manuel Ortiz, chief executive officer at BME Clearing. “Counterparties will be able to take advantage of the liquidity of an international bank of UniCredit’s stature.”

BME Clearing acts as a central counterparty for clearing of simultaneous or repo trades on Spanish, Italian, Portuguese, French, German, Austrian, and Dutch sovereign debt executed on exchanges, electronic platform or other means.

The Spanish stock exchange is being integrated with Swiss exchange operator SIX following its €2.8 billion acquisition which closed in June last year. 

SIX confirmed plans to drive forward with the integration of BME recently and is combining its securities business with BME’s across regions. The combined entity will include a separate trading markets unit and post-trading activities securities services unit. 

“The acquisition of the Spanish stock exchange operator BME, completed in 2020, will help us on all these points. SIX and BME are an outstanding match along the entire securities value chain. The merger will strengthen the competitiveness of both the Swiss and Spanish financial centres,” Jos Dijsselhof, CEO at SIX Group, said in the SIX annual report 2020.

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Launched through its innovation subsidiary BME Inntech, the big data platform aims to improve processes around best execution reporting and TCA for broker, broker-dealer, and fund manager clients to comply with MiFID II requirements.

Under Europe’s MiFID II rules, firms are required to monitor the quality of execution they receive for clients’ orders to ensure they get the best possible result. Broker and trading venue selection must also be justified based on quantitative data.

BME added the big data platform aims to reduce computing times for these processes and allow market participants to generate more customised reports on a specific order flow.

“Over the last few years, we have seen a decrease and standardisation of the commissions (explicit costs) generated from the intermediation of orders. In this context, the implicit execution cost resulting from order management takes on much greater importance,” said Berta Ares, general manager of BME Inntech.

“More and more investment managers rely on TCA reports to measure this implicit cost and use this information in their broker selection procedure.”

BME is currently being integrated with Swiss exchange operator SIX Group following its €2.8 billion acquisition of the Spanish exchange operator in June this year. SIX battled European exchange group Euronext to acquire BME following news that both were in talks for the deal.

The post BME launches big data platform for TCA and best execution service appeared first on The TRADE.

Upon announcing its first half 2020 results, SIX stated that the ongoing operational and strategic integration of the Spanish bourse will be a focus for the exchange throughout the rest of the year.

“The integration of BME and SIX, two leaders in their domestic financial markets, creates a more diversified group with a strong presence across Europe, making it the third largest European financial market infrastructure group, and the 10th largest globally by revenue,” SIX said.

As the deal closed in June, SIX acquired a 93.16% controlling stake in BME. Until 5 September, the remaining 6.84% shareholders of BME will have the opportunity to sell their shares to SIX for €32.98, the same price per share at which SIX bought the majority stake.

Shortly after SIX confirmed its intensions to acquire BME in November, pan-European exchange operator Euronext said it was also in talks to acquire BME. By March, Euronext stated it would not make a bid for BME, as SIX received various regulatory approvals for the takeover from authorities in Spain.

SIX confirmed through its 2019 report published earlier this year that it will continue to look for opportunities to acquire other market infrastructure providers, and that it has sufficient funding to do so.

“As a profit-oriented company, SIX aims not only at completing its task as a financial market infrastructure provider, but also at generating sustainable profit,” SIX Group said in the report. “To continue improving its own efficiency and fulfil its mandate in an increasingly competitive environment in the long run, SIX intends to grow both organically and through acquisitions.”

The post SIX begins operational integration of BME following €2.8 billion takeover appeared first on The TRADE.