EuroCCP-EMCF to Merge, Forming Pan-European Clearinghouse

EuroCCP, the European unit of the Depository Trust & Clearing Corp., and European Multilateral Clearing Facility NV, plan to merge to form the biggest pan-European clearinghouse.

The combined company, which will be called EuroCCP, will be based in Amsterdam. Diana Chan, chief executive officer of London-based EuroCCP, will retain that role at the new firm, she said in a phone interview today. Jan Booij, CEO of EMCF, will be chief operating officer. Financial terms of the transaction weren’t disclosed.

EuroCCP clears stocks across 19 markets, including Bats Europe, Stockholm-based Burgundy and London Stock Exchange Group Plc’s Turquoise. Competition in equity clearing arrived in Europe with alternative trading systems in 2007, driving down costs of buying and selling securities and processing the transactions. As volumes have shrunk, alternative trading systems have combined or shut down. EuroCCP and EMCF previously held talks in 2010, without reaching an agreement.

“This combination will simplify the clearing landscape and result in a more robust central counterparty,” Chan said today. “We will involve market participants and there’s the possibility of additional entities joining in the future. This is a structure that will welcome additional shareholders.”

The new clearinghouse will be owned equally by four shareholders. Nasdaq OMX Group Inc. and ABN Amro Clearing Bank, both shareholders in EMCF, will own half and New York-based DTCC and Bats Chi-X Europe Ltd. will hold the rest.

Clearinghouses act as central counterparties for every buy and sell order executed by their members, protecting them if other traders default.

EuroCCP and EMCF compete in Europe with London-based LCH.Clearnet Group Ltd., Europe’s largest securities clearinghouse, and SIX x-clear Ltd., the clearinghouse owned by Switzerland’s SIX Group.