NO 242 – APRIL 2013

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WFE Focus April 2013
Post trade

Abu Dhabi Securities Exchange to enhance DVP system

The Abu Dhabi Securities Exchange has enhanced its Delivery Versus Payment model, launched in May 2011, through the implementation of Buyer Cash Compensation settlement procedure. This new procedure, which will take effect in May 2013, means that a buying investor will be paid cash compensation in the unlikely event where securities are unavailable for delivery to the buying investor on settlement date. With the Buyer Cash Compensation settlement procedure, ADX not only seeks to reinforce the current implemented DVP model, but also keep in adherence with international standards for financial markets infrastructure.

Clearstream to deliver greater trade processing efficiency for tri-party repo market

Clearstream announced a collaboration with Bloomberg to provide clients an automated order routing service that delivers an additional means of accessing tri-party repurchase agreements (repo) transactions. The new service offers market participants faster and easier access to tri-party repo services in Clearstream’s integrated collateral and risk management environment, the Global Liquidity Hub, through the Bloomberg Professional service. The new service leverages Bloomberg’s STP efforts, which automates the affirmation and processing of tri-party repo transactions.

CME Clearing Europe introduces clearing of interest rate swaps

CME Clearing Europe, CME Group’s European clearing house, has launched real-time, open access clearing of interest rate swaps. This is the first step in CME Clearing Europe’s expansion into clearing OTC financial derivatives and adds to what CME Group already has accomplished with clearing OTC IRS in the US and CME Clearing Europe’s existing energy and commodity business line.

Johannesburg Stock Exchange updates rules for new derivatives market default fund

Safcom, the clearing house of the Johannesburg Stock Exchange’s derivatives market, announced the promulgation of the rules enabling the establishment of a default fund intended to add another level of investor protection in the exchange traded derivative market. The fund aims to reduce the impact of clearing member default risk and thus limit the liability for Safcom’s clearing members. Under the new rules, Safcom now has a clearly defined and transparent full risk waterfall with four levels of protection built into the system for default purposes: namely initial margin of the defaulting clearing member, the defaulting clearing member’s contribution to the default fund, SAFCOM’s contribution to the fund and lastly, non-defaulting members’ contributions to the fund. The new fund reduces systemic risk as well as clearing members’ exposure to counterparty credit risk when clearing through Safcom.

Moscow Exchange introduces T+2

Moscow Exchange has begun the settlement of securities on the T+2 basis, bringing its procedures in line with international best practices. The move makes trading on Russia’s main exchange more attractive to both international and Russian market participants. Previously 100% advance depositing of both cash and securities was required, known as T+0. The move to T+2 settlement for the more than 1780 securities listed on the Exchange will be executed in stages. From 25 March to 30 June 2013, T+2 settlement will be available for the 15 most liquid stocks and all issues of government bonds. They will concurrently continue to be available on a T+0 basis. Beginning 1 July 2013, the Exchange will extend the list of T+2 eligible securities and settlement and T+0 will end. From 1 January 2014, all securities listed on the Moscow Exchange’s securities market will be settled on the T+2 basis.