Cboe Clear Europe to clear OTC cash equities trades in Q2 2025

Rick Steves

“Cboe Clear Europe’s extensive venue coverage combined with CTM’s large client base will deliver increased operational efficiency and netting opportunities across European trading venues.”

Cboe Clear Europe and DTCC are working to deliver an enhanced post-trade workflow for over-the-counter (OTC) cash equities trades to help increase settlement efficiencies across UK and European markets, the firms announced.

The partnership between the largest and most connected pan-European cash equities CCP and the post-trade market infrastructure is set to increase post-trade efficiencies while providing clients with the benefits of an established risk management counterparty.

The service will bring OTC cash equities trades into Cboe Clear Europe’s cleared environment, which can then be netted against on-exchange transactions for settlement purposes, delivering potentially significant efficiencies.

“The first CCP to connect to DTCC’s CTM tri-party matching workflow”

As part of this initiative, DTCC and Cboe Clear Europe will develop a proof of concept that links DTCC CTM’s tri-party trade matching workflow with Cboe Clear Europe.

This connection will allow Prime Brokers to receive a golden copy of transaction details when a match is achieved between a Hedge Fund and Executing Broker via DTCC’s CTM service. Once the Prime Broker enters into this tri-party match, CTM automatically sends those matched trades to the CCP, providing netting and clearing benefits to mutual clients.

The new workflow will help reduce operational and settlement risk, as well as post-trade friction as additional markets consider and prepare for accelerated settlement.

Val Wotton, Managing Director and General Manager, DTCC Institutional Trade Processing, said: “We are pleased to be working with Cboe Clear Europe on this important initiative to bring greater post-trade efficiencies to the industry as the global markets look to accelerate to a T+1 settlement cycle. Cboe Clear Europe’s extensive venue coverage combined with CTM’s large client base will deliver increased operational efficiency and netting opportunities across European trading venues. DTCC remains committed to bringing greater post-trade automation to increase efficiencies for global financial markets as they work toward implementing accelerated settlement.”

Vikesh Patel, President, Cboe Clear Europe, commented: “We are excited to be the first CCP to connect to DTCC’s CTM tri-party matching workflow. This joint solution enables us to bring greater efficiencies to our clients, helping to optimize their current post-trade workflows and operational processes as the global financial markets look to accelerate settlement cycles.”

Projected to go live in Q2 2025

The benefits of this initiative include reductions in post-trade processing time, risks associated with OTC transactions and settlement costs between Executing Brokers and Prime Brokers. It is anticipated that the joint solution will also help facilitate a reduction of capital requirements when moving from OTC to CCP settlement as well as lower trade fails and defaults.

CTM is DTCC Institutional Trade Processing’s (ITP’s) central matching service for cross-border and domestic transactions across multiple asset classes, including OTC and on exchange cash equity transactions. Today, there are 6,000+ clients in more than 80 countries using CTM to streamline workflows.

Cboe Clear Europe is a pan-European Central Counterparty, the most connected CCP in Europe – offering clearing services to 46 trading venues. Cboe Clear Europe is approved to clear cash equities, depositary receipts, ETFs and equity derivatives (index futures and options and equity options) contracts.

The first effort in this initiative to link DTCC’s CTM to Cboe Clear Europe’s CCP is, subject to the satisfactory completion of regulatory procedures, projected to go live in Q2 2025.

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