ICAP Routes €212 Billion Notional Equity Baskets into Bats Europe’s ETR

ICAP plc, a markets operator and provider of post trade risk mitigation and information services, and Bats Europe, Europe’s largest stock exchange, have announced that following the launch of ICAP’s cleared equity basket solution in April 2015, over €212 billion of notional trades have been routed through the Bats Exchange Trade Reporting (ETR) service for clearing during the financial year ended 30 June 2016.

The service enables cash equity baskets to be traded anonymously on-exchange and cleared while deepening Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term.

ICAP and Bats developed the solution to solve over-the-counter (OTC) market issues surrounding the trading of European index Exchange for Physical (EFP).

Prior to the solution being launched, the cash/physical leg of the transaction was settled on an OTC bilateral basis, while the futures leg was exchange-traded and cleared.

Submission of Equity Trades

The solution works by customers submitting their equity trades through the ICAP Securities multilateral trading facility (MTF) accessed on ICAP Fusion, the company’s e-commerce portal for trading venues. ICAP then routes these matched third party trades to Bats’ ETR service to enable the cash basket to be reported on exchange and cleared through the CCP, mitigating bilateral counterparty risk.

Bats ETR Service

The Bats ETR service provides reduction in counterparty risk by allowing for centralised clearing, which has been welcomed during recent market uncertainty and volatility.

For example, on Friday 24 June, following the Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term referendum results, ICAP routed more than 80 percent of its EFP business to Bats cleared ETR services, up from the typical 60 percent, highlighting the importance of centralised clearing during times of market uncertainty to reduce counterparty risk.

This trend is likely to continue as the balance sheet of banks, and the reduction of OTC counterparty risk continues to be a priority in financial services.

New Regulations

The solution has future-proofed this type of trading activity by ensuring that it adheres to new regulations such as MiFID II and Basel III which seek to make markets more transparent and reduce counterparty risk.

Garry Stewart, Deputy CEO of EMEA Global Broking at ICAP, commented: “Collaborating with Bats Europe, ICAP has developed a unique solution, for a market which has seen limited innovation since it was founded. The take-up of our combined solution demonstrates the market interest for fully cleared, on exchange trading in traditional OTC brokered markets.”