Cboe Clear Europe Yearly Recap and Look Ahead

Arnoud Siegmann, Interim President and Chief Operating Officer of Cboe Clear Europe, summarises Cboe Clear Europe’s activities over 2022 and looks ahead to its plans for 2023.

In cash equities, we managed to hit several major milestones in 2022. We cleared 1.5 billion client trades during the year, an all-time record and up on the 1.24 billion cleared in 2021 (see chart 1). In addition to enhancing our leading position on ven-ues that support interoperable clearing, we also saw significant growth in preferred clearing, which is used on venues that do not support interoperability. Cboe Clear Europe cleared a record 52m trades in 2022 through the preferred clearing model, compared to 9 million in 2021 (see chart 2). It is through this service that we have seen significant traction on Euronext markets, and we ended the year with a daily market share of ~16% on the group’s exchanges in Amsterdam, Brussels, Lisbon and Paris – an all-time high. We also saw steady growth in our preferred cleared volumes on Euronext Milan, a service we first introduced in September 2021 to help establish clearing competition in the Italian market.

Overall Client Volumes, 2022

Source: Cboe Clear Europe

We are confident our volumes via preferred clearing will grow further, helping to bring about a competitive clearing environment where full interoperability does not exist, and bring further meaningful cost-savings and efficiencies to our participants. The growth in our preferred clearing model has come at an important time, where significant market changes are taking place within the Euronext Group, and our suc-cess on preferred clearing ensures we maintain an open and competitive market.

We are also confident that we will clear the first trades on Deutsche Boerse later this year. 

Preferred Clearing Volumes on Euronext Markets

Source: Cboe Clear Europe

Alongside cash equities, we continued with our diversification strategy and expansion into equity derivatives in support of Cboe Europe Derivatives (CEDX). Having launched in September 2021 offering futures and options on six key European equity indices, CEDX created a truly pan-European product suite in 2022 by adding futures and options on four additional European indices in April. This innovative marketplace achieved record monthly volumes in December, and we are committed to providing participants with meaningful cost savings and capital efficiencies by offering the ability to clear a broad range of pan-European index futures and options at a single CCP. We will continue to support the further product expansion of CEDX throughout 2023, including the introduction of single stock products, subject to regulatory approval.

Our other notable achievements during the year included supporting the industry with the roll out of the new settlement discipline regime under CSDR. We also continued to expand our ETF clearing offering for both primary and secondary markets, and this will remain a focus of our growth efforts.

As we look ahead to 2023, there are potential market structure changes on the horizon following the decision of some national exchanges to revert to a reliance on their own clearing provider. We believe a competitive clearing environment should be viewed as a key element of the EU’s efforts to revitalise its capital markets, helping to attract investors and reduce the costs of investing. As a long-time advocate of open access, we have witnessed first-hand the benefit this brings to participants. As mentioned above, we saw strong uptake for our preferred clearing service in 2022 and will continue to push for this trend to become mainstream in 2023.

We will also be paying close attention to the regulatory environment, in particular the refit of both CSDR and EMIR, and will work on advocating for changes that advance the industry.

Given the political desire to attract more clearing into the EU is very evident in the EMIR review, our focus around that process will be to ensure that it enhances the regulatory framework around CCPs in a manner that promotes both safety and innovation. In other areas, you are likely aware that we are a participant in the Bank of England’s UK Temporary Recognition Regime for non-UK CCPs, which allows us to offer cash equity clearing to UK Clearing Participants and UK trading venues while we seek permanent recognition under the UK regime. We have always believed Cboe Clear Europe’s in-EU status has positioned us well in the post-Brexit world and achieving UK recognition will strengthen that position even further.

We would like to offer our thanks to all our members and clients for supporting Cboe Clear Europe during a challenging but ultimately successful 2022. With our shared values and focus on the safety of our markets, innovation and client service, I believe we can do even more to advance financial markets in Europe this year.