Cboe Clear Europe Clears First Securities Financing Transactions

Rhea-AI Summary

Cboe Clear Europe has launched a groundbreaking clearing service for European Securities Financing Transactions (SFTs) in cash equities and ETFs. The first transactions were executed between Natixis Corporate & Investment Banking as Principal Lender and JP Morgan as Borrower.

The service transforms bilateral SFT processing into a centrally cleared model, utilizing BNY and JP Morgan as Tri-Party Collateral Agents, with Pirum handling trade instructions. The clearing service covers 19 European Central Securities Depositories and is available to principal lenders, special participant lenders, and borrowers.

Key benefits include:

• Enhanced capital efficiencies for stock borrowing and lending activities
• Cross-margining advantages between cash equities and SFTs
• Improved settlement efficiencies
• Elimination of agent lender disclosures
• Streamlined fees management and corporate actions

Positive

• First-of-its-kind SFT clearing service launches, expanding Cboe's market position
• Service increases capital efficiencies for securities lending activities
• Cross-margining benefits between cash equities and SFTs reduce costs
• Multiple major financial institutions already onboarded or in testing phase

Negative

• Initial launch to cash equities and ETFs only
• Success depends on broader market adoption and trading volume growth

Insights

Securities Trading & Infrastructure Analyst

Cboe's launch of central clearing for European Securities Financing Transactions (SFTs) represents a strategic expansion of its clearing capabilities that addresses significant market inefficiencies. This service transforms bilateral securities lending transactions into a centrally cleared model, delivering capital efficiency improvements that have become increasingly critical as Basel IV implementation approaches.

The immediate revenue impact may be modest, but this initiative positions Cboe Clear Europe to capture growing demand for capital-optimized clearing solutions across multiple asset classes. By leveraging its existing position as Europe's largest cash equities clearing house, Cboe has created this service with relatively incremental infrastructure investment.

Three structural advantages make this offering compelling: First, cross-margining between cash equities and SFTs creates unique capital savings unavailable elsewhere. Second, settlement efficiencies across 19 European CSDs address CSDR-related challenges. Third, the elimination of agent lender disclosures reduces operational friction for participants.

The ability to secure participation from major institutions like JP Morgan, Natixis CIB, and BNY demonstrates market validation. This service expansion represents an important diversification of Cboe Clear Europe's revenue streams beyond traditional cash equity clearing, likely improving the segment's margin profile while enhancing the parent company's recurring revenue composition.

• Cboe Clear Europe launches clearing service for European SFTs in cash equities and ETFs
• Natixis CIB and JP Morgan among first participants to use new service
• Introduced to meet strong client demand for central clearing of SFTs, enhancing capital, operational and post-trade processing efficiencies amid evolving regulatory requirements

AMSTERDAM and LONDON, March 31, 2025 /PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announces that Cboe Clear Europe has commenced clearing of European Securities Financing Transactions (SFTs). Natixis Corporate & Investment Banking acted as a Principal Lender against JP Morgan as a Borrower, as part of the first trades cleared through the new service.

Cboe Clear Europe has leveraged its position as the largest pan-European clearing house for cash equities to bring this first-of-its-kind service to market, which represents a key step in the company's strategy to become a leading multi-asset class clearing house in the region. This service transforms the bilateral process for SFTs in European equities and ETFs into a centrally cleared model, helping to increase the capital efficiencies associated with activities such as securities lending and supporting the growth of this key market. In addition to the firms that have already used the service, a number of others - including banks, asset managers, broker-dealers, and Agent Lenders - have completed final testing in preparation for clearing.

The service utilises BNY and JP Morgan as Tri-Party Collateral Agents, while Pirum serves as the transmitter of new trade instructions and post-trade lifecycle events on behalf of clients.

Vikesh Patel, President of Cboe Clear Europe, said: "We're delighted to extend our clearing capabilities with this transformative service for European SFTs. This launch responds to strong client demand for a clearing solution to help improve the capital efficiencies associated with stock borrowing and lending activities – delivering significant benefits to all participants in this ecosystem, including asset owners which lend out inventory as a way of generating additional income for their members. It demonstrates our commitment to both investing in and delivering innovative clearing solutions in collaboration with our clients to meet the growing focus of financial institutions on becoming more capital efficient. We look forward to building out this new ecosystem and exploring opportunities to expand the service into other asset classes and regions."

Gesa Johannsen, Executive Platform Owner, Global Collateral, at BNY, said: "Cboe Clear Europe's offering for European SFTs is an important step as the global collateral industry seeks to leverage central clearing solutions that deliver capital efficiency and enhance the safety and resiliency of funding markets. We're excited to provide clients with the option to clear securities lending transactions through Cboe's new service while leveraging BNY's global collateral platform to manage their liquidity and to access cleared and uncleared collateral markets globally."

Grégoire Froehlich, GSF Trader at Natixis Corporate & Investment Banking, said: "Clearing SFTs at Cboe Clear Europe enhances our capital efficiencies and reduces operational complexities associated with these products. We're delighted to be among the first participants to clear this product at Cboe Clear Europe."

Robert Frost, Chief Product Officer at Pirum, said: "We are delighted to be supporting this important initiative and to extend our services to cleared securities financing transactions. This collaboration is a fantastic example of innovative firms working together to help increase the efficiency of the securities finance industry, and we look forward to continuing to roll out the service in 2025 with the team at Cboe Clear."

Jan Treuren, SFT Product Lead, Cboe Clear Europe, said: "Clearing the first trades is an important milestone for our SFT services, and demonstrates our ability to efficiently leverage our infrastructure and technology capabilities to address customer needs. We expect activity to increase in the weeks and months ahead, with active onboarding and testing already underway with principal lenders, agent lenders acting on behalf of special participant lenders (including UCITS and non-UCITS beneficial owners), and the borrower community."

Cboe Clear Europe is offering central clearing, settlement and post-trade lifecycle management of European SFTs in cash equities and ETFs. This service is available to principal lenders, special participant lenders (UCITS and non-UCITS) and borrowers, with settlements conducted across 19 European Central Securities Depositories (CSDs).

The introduction of central clearing is designed to make the trading of SFTs more capital efficient, particularly with regards to risk-weighted assets. This efficiency is expected to be particularly important given the increased regulatory, capital and operational burdens associated with SFTs resulting from the Central Securities Depositories Regulation (CSDR), Securities Financing Transactions Regulation (SFTR), and planned Basel IV implementation.

The service also provides margin and operational advantages within the largest cash equities clearing house in Europe, including savings from cross-margining between cash equities and SFTs, greater settlement efficiencies, elimination of agent lender disclosures, and improved practices around fees management and corporate actions.

Learn more about Cboe Clear Europe's services here.

About Cboe Global Markets

Cboe Global Markets (Cboe: CBOE), the world's leading derivatives and securities exchange network, delivers cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives and FX, across North America, Europe and Asia Pacific. Above all, we are committed to building a trusted, inclusive global marketplace that enables people to pursue a sustainable financial future. To learn more about the Exchange for the World Stage, visit www.cboe.com.

Cboe Media Contacts			Cboe Analyst Contact
Angela Tu	Tim Cave			Kenneth Hill, CFA
+1-646-856-8734	+44 (0) 7593-506-719			+1-312-786-7559
atu@cboe.com	tcave@cboe.com			khill@cboe.com

Neither Cboe Global Markets, Inc. and its affiliates nor BNY, Natixis, JP Morgan, and Pirum recommend or make any representation as to possible benefits from any securities, futures or investments, or third-party products or services. Cboe Global Markets, Inc. is not affiliated with BNY, Natixis, JP Morgan, and Pirum. Investors should undertake their own due diligence regarding their securities, futures, digital assets, and investment practices. This press release speaks only as of this date. Cboe Global Markets, Inc. disclaims any duty to update the information herein. 

Nothing in this announcement should be considered a solicitation to buy or an offer to sell any securities or futures in any jurisdiction where the offer or solicitation would be unlawful under the laws of such jurisdiction. Nothing contained in this communication constitutes tax, legal or investment advice. Investors must consult their tax adviser or legal counsel for advice and information concerning their particular situation.

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Some factors that could cause actual results to differ include: the loss of our right to exclusively list and trade certain index options and futures products; economic, political and market conditions; compliance with legal and regulatory obligations; price competition and consolidation in our industry; decreases in trading or clearing volumes, market data fees or a shift in the mix of products traded on our exchanges; legislative or regulatory changes or changes in tax regimes; our ability to protect our systems and communication networks from security vulnerabilities and breaches; our ability to attract and retain skilled management and other personnel; increasing competition by foreign and domestic entities; our dependence on and exposure to risk from third parties; factors that impact the quality and integrity of our and other applicable indices; our ability to manage our global operations, growth and strategic acquisitions or alliances effectively; our ability to operate our business without violating the intellectual property rights of others and the costs associated with protecting our intellectual property rights; our ability to minimize the risks, including our credit, counterparty, investment, and default risks, associated with operating our clearinghouses; our ability to accommodate trading and clearing volume and transaction traffic, including significant increases, without failure or degradation of performance of our systems; misconduct by those who use our markets or our products or for whom we clear transactions; challenges to our use of open source software code; our ability to meet our compliance obligations, including managing our business interests and our regulatory responsibilities; the loss of key customers or a significant reduction in trading or clearing volumes by key customers; our ability to maintain BIDS Trading as an independently managed and operated trading venue, separate from and not integrated with our registered national securities exchanges; damage to our reputation; the ability of our compliance and risk management methods to effectively monitor and manage our risks; restrictions imposed by our debt obligations and our ability to make payments on or refinance our debt obligations; our ability to maintain an investment grade credit rating; impairment of our goodwill, long-lived assets, investments or intangible assets;  the accuracy of our estimates and expectations; and  litigation risks and other liabilities. More detailed information about factors that may affect our actual results to differ may be found in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2024 and other filings made from time to time with the SEC.

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SOURCE Cboe Global Markets, Inc.

FAQ

What is the new service launched by Cboe Clear Europe for SFTs?

Cboe Clear Europe launched a central clearing service for European Securities Financing Transactions (SFTs) in cash equities and ETFs, transforming bilateral processes into a centrally cleared model.

Who were the first participants in Cboe Clear Europe's SFT clearing service?

Natixis Corporate & Investment Banking acted as Principal Lender and JP Morgan as Borrower in the first cleared transactions.

What are the main benefits of Cboe's new SFT clearing service?

The service offers improved capital efficiencies, cross-margining benefits, better settlement processes, eliminated agent lender disclosures, and enhanced fees management.

How many European Central Securities Depositories (CSDs) does the Cboe SFT clearing service cover?

The service conducts settlements across 19 European Central Securities Depositories (CSDs).

Why is Cboe launching SFT clearing services in 2025?

The service addresses increased regulatory, capital, and operational requirements from CSDR, SFTR, and planned Basel IV implementation, while meeting strong client demand for central clearing solutions.