Central clearing of exchange trades: Latest advance in the internationalization of the Austrian capital market
The Austrian stock exchange offers CCP.A members a modern platform for the clearing of exchange trades
Central Counterparty Austria guarantees the stability of the financial marketplace
"Clearing is the only option for the future"
On 2 August 2004 of last year, Oesterreichische Kontrollbank AG (OeKB), the organization that had acted as clearing and settlement agent for cash market products up to then, and Wiener Börse AG, the exchange operating company and clearing house for derivate products jointly established the company "CCP Austria Abwicklungsstelle für Börsengeschäfte GmbH" (CCP.A).
On 31 January 2005, CCP.A successfully started operations as the central counterparty for all exchange trades in securities and derivatives after an intense phase of preparation and coordination with market institutions and the participants of the Austrian capital market.
CCP.A is responsible for 55 clearing participants who are members of Wiener Börse. CCP.A manages a volume of some € 150 million for Austrian and international securities firms by serving as guarantor for trades in an environment of constantly changing market conditions.
Today, after the surge in trading volumes on Wiener Börse, CCP.A clears over 10,000 exchange trades on peak days. One of the most modern netting procedures is employed to reduce the daily number of exchange trades by a factor of seven to as few clearing transactions as possible. CCP.A guarantees all settlement obligations arising from the exchange trades.
A trend which has been observed for several years in developed capital markets is the establishment of a central counterparty as the standard method for clearing and settling exchange trades. In the past few years, numerous projects of this type have been started worldwide, although success has been more difficult in the less developed markets.
The introduction of central counterparties in securities markets enables participants to benefit from netting, i.e., the offsetting of same-day buy and sell trades, and from superior risk management techniques for the clearing of derivatives which would otherwise be impossible without a central counterparty. This has substantially contributed to strengthening the stability of the financial system.
The creation and operation of a CCP will become a standard feature of a modern capital market in the future. The Austrian capital market operates one of the most modern CCP in Europe. The Austrian CCP.A is not only the central counterparty for cash market transactions, but also for trades on the derivatives market.
CCP.A is a neutral institution without any own market interests, which provides its national and international members customer-oriented services and whose principal function is that of central risk management. The company bundles the long years of experience and clearing expertise of the two founders, OeKB and Wiener Börse.
