EMCF “ready to service LSE flow”

European Multilateral Clearing Facility (EMCF), the Dutch-regulated central counterparty that clears trades for three UK-regulated MTFs, has been granted recognised overseas clearing house (ROCH) status by the UK’s regulator, the Financial Services Authority. This will allow EMCF to act as a clearinghouse for regulated markets in the UK, including the London Stock Exchange (LSE), and enable it to cater for its existing MTF users should they wish to become full exchanges.

EMCF, which is regulated by the Netherlands Authority for the Financial Markets (AFM) and Dutch central bank De Nederlandsche Bank (DNB), previously cleared for multilateral trading facilities (MTF) Chi-X, BATS Europe and Nasdaq OMX Europe under foreign exempt status. There is no regulatory requirement for EMCF to have ROCH status to clear for the MTFs, but because of the alternative venues’ growing market share, the FSA had become increasingly keen for EMCF to become an ROCH, according to Jan Bart de Boer, chairman of the clearing house’s supervisory board.

In theory, EMCF could now offer clearing services to the London Stock Exchange. “From a regulatory perspective, EMCF is now ready to service LSE flow,” said de Boer. “EMCF would now be able to do a deal with LCH.Clearnet [The LSE’s clearing house] and the LSE. The question is whether LCH and the LSE are willing to do a deal.”