Capital Market Linkages: How to facilitate cross border trading - OIC

Capital Market Linkages:How to facilitate cross border trading?OIC Member States‟ Stock Exchanges ForumDr. Jochen BiedermannIstanbul, 02 October 2010

Deutsche Börse Group, 02 October 2010Globally operating provider of financial servicesLocations of Deutsche Börse Group9 locations inEuropeBerlinFrankfurt/MainLondonLuxembourgMadridMoscowParisPragueZurich10 locationsin Asia / NorthAmericaBeijingChicagoDubaiHong KongNew YorkOttawaShanghaiSingaporeTokyoWashington5

254 Xetra Members in 18 countries465 Eurex Members in 27 countriesDeutscheEurexBörse Group, 02 October 2010FinlandSwedenDenmarkIrelandUKNetherlandsGermanyBelgiumCzech RepublicLuxembourg AustriaFrance SwitzerlandCroatiaPortugalSpainGibraltarItalyGreeceCyprusCanada (1)USA (69)Japan (0)UAE (4)Hong Kong (4)Taiwan (5)XetraSwedenSingapore (4)Ireland UKNetherlandsBelgiumGermanyLuxembourCzech RepublicgAustriaFranceHungarySwitzerlandBulgariaItalySpainCyprusGibraltarHostAccess point (number ofconnected members in brackets)Additional member sitesAustralia (2)6

AgendaDeutsche Börse Group, 02 October 20101. About Deutsche Börse2. Capital Market Linkages3. Examples7

Capital Market LinkagesWhy are they worth to be considered ?Deutsche Börse Group, 02 October 2010Create additional order flow andrevenue streams for the exchangeOffer new productsAccelerate financialmarket developmentsProvide diversification opportunitiesfor local investorsAddress new customer groupsand enlarge investor basePromote local companies abroadfor easier access to foreign capital8

Capital Market LinkagesPoints for consideration while selecting the right modelDeutsche Börse Group, 02 October 2010Regulatory SituationDirect membership mutually possible?Time Zone & Geographical DistanceOverlapping trading hours?Costs of technical connections?JurisdictionCapital or any other restrictions in place?Conflict of InterestsBusiness of local brokers?Question of “growing the pie”?PotentialFramework forCapital MarketLinkagesClearing & SettlementEfficient transfer of securities possible?Market DataAccess to each other‟s market pricesand company data?IT SolutionsInterfaces between trading systems?Common technical Standards (FIX)?Re-use of member network possible?Customer DemandLocal investors„ level of knowledge aboutthe partner‟s markets‟ securities?How to achieve sufficient liquidity?9

Capital Market LinkagesPotential ModelsDeutsche Börse Group, 02 October 2010Infrastructure• Common trading and/or clearing platforms• Shared member networks / mutually hostingof access points to each others‟ markets• Joint market data distribution• Direct order routing• Clearing/CCP links• Settlement links / Link-up Markets• …Products• Mutual trading segments: foreign securitiesoffered for trading in local currency for retailinvestors• Exchange Trade Funds (ETFs) on eachother‟s major indices• Licensing & joint marketing of benchmarkproducts• After-hour trading facilities with fungiblederivatives products• …For Deutsche Börse Group any kind of exchange co-operation with creates a win-winsituation is highly interesting.We strongly believe in the benefits of partnership between marketplaces and themerits of interconnecting themselves for providing choices to investors.10

Deutsche Börse Group, 02 October 2010Linking up the Trading, Clearing and Settlement LayerBlueprintProvide easy and fastaccess for:‣ European investors tosecurities in the PartnerExchange‟s jurisdiction‣ Investors in the PartnerExchange‟s jurisdictionto European securities… by interconnecting theexchange infrastructure.European Banks & BrokersMarket Data Feeds of both jurisdictions in both currenciesTrading of instrumentsof both jurisdictions inEURCCP for EuropeanInstrumentsInternational CentralSecurities DepositoryTrading LinkCross-Border TradingClearing LinkPosition & Risk Mgmt.CSD LinkCross-Border DeliveriesPartnerExchangeOrganizationTrading of instrumentsof both jurisdictions inpartner‟s currencyPartnerExchangeOrganizationCCP for Partner‟sInstrumentsPartnerExchangeOrganizationPartner‟s CentralSecurities DepositoryPartnerExchangeOrganizationPartner‟s Banks & Brokers11

AgendaDeutsche Börse Group, 02 October 20101. About Deutsche Börse2. Capital Market Linkages3. Examples12

Eurex/ISE Link: Access to the USDeutsche Börse Group, 02 October 2010Eurex, the International Securities Exchange (ISE) and the Options Clearing Corporation (OCC) provide atransatlantic trading and clearing link that enable Eurex customers to trade ISE options through their existingEurex membership.Eurex customers benefit from direct access to the world‟s largest equity options market while ISE membersbenefit from interaction with a new set of order flow providers who deepen the liquidity pool on the ISE.TradingMemberISEISE“matching““TradingLink“EurexClearing“sponsoredaccess“TradingMemberEUREX●●No need to become ISE member or toenter into a contractual relationship withOCC.Only signing of Order RoutingAgreement required to apply for tradingconnection to ISE.ClearingMemberOCCOCC“open interest“DTCC“Clearing“ClearingLink”Link”“SettlementLink”EurexClearing“trade andpositionmanagement“ClearingMemberECAG●●●Eurex Clearing AG acts as thesponsoring participant providing tradingaccess to the ISE.In its capacity as associatedclearinghouse, ECAG will clear andmaintain its members‟ positions at OCC.Eurex members can use their existingclearing relation. Amended ClearingAgreement needs to be signed to alsocover the Eurex/ISE LinkSEC RegulationBaFin / German/EU Regulation●Home market settlement at DTCC vialocal custodian.13

24 Hour Trading of KOSPI 200 OptionsCooperation between Korea Exchange and EurexDeutsche Börse Group, 02 October 201014

Thanking you for your kind attention!İlginiz için teşekkür ederim !非 常 感 谢 您 的 关 注 !Спасибо за внимание!شكرا على حسن انتباهكمVielen Dank für Ihre Aufmerksamkeit!Dr. Jochen BiedermannSenior Vice PresidentHead of International AffairsDeutsche Börse AG60487 Frankfurt am MainGermanyE-mail: biedermann@deutsche-boerse.com