The Chicago-headquartered company has said the Swiss-owned Six x-clear will begin clearing for its off-exchange Getco Execution Services
Europe trading platform, known as GETMatched Europe, in coming weeks. EuroCCP
, the equities clearing house owned by The Depository Trust & Clearing Corporation
, is expected to be added at a later date, according to two sources familiar with the situation.
Sophie Sohn, a spokeswoman for Getco, confirmed the addition of Six x-clear to the company's dark pool, pending regulatory approval. She would not comment on the addition of EuroCCP.
Virginie Saade, director of European sales at Getco Execution Services, said: “We are very pleased to welcome Six x-clear as an additional clearing house to GETMatched Europe. Adding a leading and fully interoperable clearing service provider such as Six x-clear allows our clients to access a broader range of tools and choices in order to manage their pan-European trading activity.”
Getco launched its dark pool in Europe in June 2010 with LCH.Clearnet
, the Anglo-French clearing house, as its sole clearer. Adding two further clearers will help reduce the cost of trading on the platform by allowing banks and other users to pick their clearer of choice, in a model known as interoperability.
In the past, exchanges have either owned a clearer or selected one to exclusively serve their market. By offering a choice of clearers, however, interoperability allows firms to consolidate their clearing flows in their preferred clearing house, which allows for greater economies of scale with respect to margining and settlement fees.
The model has taken hold among Europe's multilateral trading facility community, with six alternative trading platforms – Chi-X Europe
, Bats Europe
MTF, the London Stock Exchange-owned Turquoise
, Nordic-based Burgundy
Exchange and the retail trading platform Equiduct
– having moved to the interoperable model during the past 18 months.
The model has spurred competition among Europe's clearing houses, resulting in upfront clearing fees falling by up to 80% during the past two years, according to clearing firms.
According to two sources familiar with the matter, GES Europe took the decision to move to interoperability following pressure from its bank clients. The additional clearing choice could also help boost volumes on the GES Europe platform, which has struggled to replicate the success that GES has enjoyed in the US.
Speaking to Financial News
in February, Jon Ross, who formerly ran the European dark pool before moving back to the US to serve at Getco's chief technology officer in July, said the company had had some "challenges" in building out the platform in Europe.
He added: “But once we explain the model and once clients connect, they realise the market impact is far lower than on some public markets. We have established GES as a separate corporate entity [and] trading is completely anonymous ...We believe it is one of the most visible dark pools there is – since all client orders execute against Getco liquidity, clients always know who they are trading with.”
The introduction of clearing choice at the post-trade layer has helped to boost trading volumes on some platforms, in particular UBS MTF, which saw its market share double the month after it added a second clearer. Bats Chi-X Europe has also picked up new Swiss trading firm clients as a result of adding Six x-clear to its platform in July last year, according to two sources familiar with the situation.
Getco's move signals that off-exchange trading venues are also beginning to embrace interoperability, which has so far been a feature of the alternative public markets. However, the majority of Europe's exchanges, have yet to succumb to growing industry pressure to offer clearing choice.
EuroCCP declined to comment. Six x-clear was not immediately available for comment.
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