Industry Leaders Say Market Infrastructure Reforms Will Play A Critical Role In The Growth of Europe's Equity Trading Volumes

London, 18 November 2011 - At a panel discussion hosted by EuroCCP, the pan-European cash equities clearing house, on 17 November 2011 in the City of London, industry leaders representing market infrastructure providers, trading venues and trading firms, said that market structure reforms will play a critical role in the growth of Europe’s equity trading volumes.

The panel discussion was moderated by Michelle Price, Trading and Technology Editor at Financial News. During the discussion, panellists made the following statements.

Diana Chan, CEO, EuroCCP, said:

"The introduction of interoperable clearing marked a new chapter in the market infrastructure supporting equity trading in Europe. That said, it is only once all interoperating CCPs get equivalent access to all the trading venues they clear for that trading firms can fully realise the benefits of true competition.

"If there is wider adoption of interoperability across all trading venues, including regulated markets, the European equities trading landscape will be transformed. We expect a significant reduction in post trade frictional costs which have been a major obstacle to growth in equity trading in Europe."

Andrew Bowley, Managing Director, Head of Electronic Trading Product Management, Nomura, said:

"Interoperability matters because it drives down the cost of trading, creates economies of scale and discounts and brings efficiency to the settlement cycle.

"European equity turnover has shrunk significantly. We need to think about where we are going in terms of the balance between transparency and liquidity.

"One of the biggest threats to the equities market is people avoiding them altogether by going into synthetic products such as CFDs and swaps. If that materialises we will have a different type of fragmentation to what we’ve seen so far."

Matteo Cassina, President, Citadel Execution Services Europe, said:

"Now is the time to address the market structure issues that are preventing European equity markets from evolving as policymakers had always envisaged following the introduction of MiFID. The continued dominance of national monopolies is restricting the delivery of efficiencies in European equity markets. Moreover, current market structure issues such as the absence of a consolidated tape and ineffective execution policies which remain unchallenged by regulators mean that retail investors, who should be provided the most protection in financial markets, are at a distinct disadvantage.

"Unless policymakers act decisively, there is a risk that the cost of market structure enhancements will outweigh the benefits delivered to end investors."

Paul O’Donnell, Chief Operating Officer, BATS Europe, said:

"A robust market infrastructure is an essential component of a stable, interconnected financial market and we support efforts to strengthen the current system. At BATS we constantly aim to promote greater clarity about the issues and potential solutions for a more optimal pan- European trading environment and we look forward to contributing our views to the discussion."

Bjørn Sibbern, President of NASDAQ OMX Copenhagen and Senior Vice President, Equities Market, Transaction Services Nordic, said:

"At NASDAQ OMX we believe competition is the best driver of market innovation and increased effectiveness. Therefore we declared our intent to pursue a competitive clearing model in 2009, and with a regulatory consensus now in place, we are eager to move forward. We are confident that a competitive CCP model will act to drive liquidity and lower investor costs, thus benefiting our clients and the European capital market as a whole."

About EuroCCP

European Central Counterparty Limited (EuroCCP) is a UK-incorporated, FSA-regulated Recognised Clearing House. It is the European subsidiary of The Depository Trust & Clearing Corporation (DTCC) and is headquartered in London. EuroCCP was formed to provide clearing and settlement services for a wide range of trading venues across Europe, offering the scale economies of the US market and risk management expertise to European market participants. It currently clears equity trades in 19 markets. EuroCCP provides pan-European central counterparty services for BATS Europe, NYSE Arca Europe, Pipeline Financial Group Limited, SIGMA X MTF, SmartPool, Turquoise and UBS MTF.

EuroCCP has been selected to clear for Chi-X Europe on an interoperable basis. EuroCCP has the mandate from NASDAQ OMX Nordic Exchanges to provide competitive clearing for the stock exchanges of Copenhagen, Helsinki and Stockholm.

EuroCCP has developed a capability to clear over-the-counter (OTC) European cash equities trades. It currently clears trades matched on the Omgeo CTM platform and has been mandated by SWIFT to provide a pan-European clearing for its Accord platform.