The Nasdaq OMX Group Inc. (NDAQ) says it has taken a 22% stake in the European Multilateral Clearing Facility N.V. (EMCF).
Nasdaq first struck an agreement to partner with the European clearing house from Fortis Bank Nederland (Holding) N.V., in the fourth quarter of 2008. No value was given for the size of Nasdaq's stake by either exchange.
In a joint statement on Thursday, the exchanges outlined their objectives in reinforcing EMCF's position as a leading clearing house in Europe. As a result of the transaction, NASDAQ OMX will have two representatives on the supervisory board of EMCF.
One of the benefts of the deal to investors, says Nasdaq, is that the agreement also includes use of EMCF to service central counterparty (CCP) transactions for all Nordic deals.
Nasdaq says its decision to introduce CCP services in the Nordic markets and its investment in EMCF is part of a "broader commitment to reduce clearing and settlement costs for its customers in Europe."
"Our investment in EMCF, and its commitment to provide cross netting between the Nordic markets and MTFs in London is a reflection of our drive to deliver clearing efficiencies to these markets," said Chris Concannon, executive vice president of NASDAQ's transaction services, in a statement.
He added: "This investment also reinforces our desire to support interoperability across Europe. It is a critical and needed structural change for the European markets, one that will increase competition and lower investor costs."
Cross netting of trades should provide cost savings to investors by cutting out clearing fees on both ends of transactions, according to the exchanges.
"Interoperability between clearing houses allows markets to interact with multiple clearing houses to clear and settle their trades, increasing competition and lowering costs for investors," said officials of both exchanges.