NASDAQ OMX Commodities: Merger And Introduction Of Block Trade Facility For Freight Derivatives

11/04/2013

NASDAQ OMX Commodities (“NASDAQ”) is announcing several changes to the trading and clearing arrangements for freight derivatives resulting from the decision by NASDAQ OMX Stockholm AB (“NASDAQ OMX Stockholm”) to merge NOS Clearing ASA (“NOS”), which it acquired on July 2, 2012, into NASDAQ OMX Stockholm, with NASDAQ OMX Stockholm as the sole surviving entity by the end of 2013. NASDAQ is also announcing the introduction of a new facility for entering into block trades (the “Block Trade Facility”) on 29 April 2013.

The Merger of NOS into NASDAQ OMX Stockholm
NOS is a clearing organization organized under the laws of Norway and has a license from the Norwegian Ministry of Finance to clear certain commodity derivatives, including freight derivatives. NOS is supervised by the Financial Supervisory Authority of Norway, Finanstilsynet, the Norwegian financial markets regulator. NASDAQ has considered how best to integrate the freight derivatives cleared by NOS into NASDAQ’s commodity products offering in Europe.

In anticipation of the completion of the merger and the requisite integration of NOS’ clearing operations into NASDAQ OMX Stockholm, NASDAQ has, subject to regulatory approval, determined to list for trading the freight contracts cleared by NOS.

The freight contracts will continue to be cleared by NOS until NOS is merged into NASDAQ OMX Stockholm. After the merger, the freight contracts will be cleared by NASDAQ OMX Stockholm.

The merger of NOS into NASDAQ OMX Stockholm will take place alongside the separation of trading and clearing activities at NASDAQ OMX Stockholm mandated by the European Markets Infrastructure Regulation (“EMIR”).[1]

Block Trade Facility
The Block Trade Facility permits NASDAQ to designate any of the contracts listed for trading as eligible for block trading (each, a “Block Trade Contract”). Provided certain conditions relating to size, aggregation and price are met, Exchange Members[2] may transact in Block Trade Contracts away from the ETS (each such trade, a “Block Trade”). Block Trades nevertheless remain subject to the Trading Rules and must be reported within a set time limit.

Prices of Block Trades will be broadcast to all Exchange Members but will not, however, be included in the determination or calculation of any daily settlement amounts or affect any live prices on the ETS. In connection with the Block Trade Facility, NASDAQ is also introducing a new, limited category of Exchange Member (a “Block Broker Member”) to permit persons brokering Block Trades to report both the buyer and seller leg of a qualifying Block Trade and for ensuring that the relevant trade details are correct. Block Broker Members must maintain all necessary authorizations and registrations required under applicable law.

Further detail regarding the Block Trade Facility will be published together with the updated Trading Rules in due time.

[1]For further information on the separation of NASDAQ OMX Stockholm’s trading and clearing operations, please visithttp://www.nasdaqomx.com/europeanclearing/newsmandatorychanges/separationtradingandclearingoperations/