Sweden’s NASDAQ to reduce custodian dependency
08 May 2012 Stockholm
Image: Shutterstock
Sweden-based exchange and clearing company NASDAQ OMX Stockholm (OMX STO) set up three clearing funds to mutualise risk, and revised its collateral management structure so as not to rely too heavily on custodians that are also clearing members. After these changes in March, S&P has revised its outlook of the company to stable from negative.
S&P’s statement said: “We are revising our outlook on the long-term issuer credit rating on the company to stable from negative and affirming the long- and short-term ratings at 'A+/A-1'. The outlook reflects our expectation that the company will complete
the overhaul of its collateral management framework and that its cash flow will remain strong due to its leading position in the Nordic region's cash and derivatives markets.”
Within the new framework, clearing members will directly pledge margin collateral in cash or securities accounts in the name of OMX STO in lieu of accounts in the name of Swedish custodians, as is currently the case. S&P remarked that this should ensure that margins are immediately and directly available to OMX STO for liquidation in the event that any clearing member defaults.
The complete overhaul of the collateral management framework is expected to be completed by the end of 2012.
S&P’s statement said: “We are revising our outlook on the long-term issuer credit rating on the company to stable from negative and affirming the long- and short-term ratings at 'A+/A-1'. The outlook reflects our expectation that the company will complete
the overhaul of its collateral management framework and that its cash flow will remain strong due to its leading position in the Nordic region's cash and derivatives markets.”
Within the new framework, clearing members will directly pledge margin collateral in cash or securities accounts in the name of OMX STO in lieu of accounts in the name of Swedish custodians, as is currently the case. S&P remarked that this should ensure that margins are immediately and directly available to OMX STO for liquidation in the event that any clearing member defaults.
The complete overhaul of the collateral management framework is expected to be completed by the end of 2012.
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