The EuroCCP Fraud Continues With The Introduction Of Clearing Service for US Equities

The New Statesman reports that EuroCCP introduces clearing service for US equity issues.

(emphasis mine) [my comment]

EuroCCP introduces clearing service for US equity issues
New Statesman
Published 15 April 2010

The European Central Counterparty (EuroCCP) has created a service offering central counterparty clearing of trades in US stocks and US exchange-traded funds (ETFs) to European trading firms.

EuroCCP's new service gives European trading firms an opportunity to trade US securities on a variety of pan-European platforms during European trading hours and to settle those trades in DTC. By offering a service where US securities settle directly at the US CSD, EuroCCP provides European trading firms with cost-effective post-trade solution.

Its clearing service for US issues allows EuroCCP to extend the efficiency, cost-saving and counterparty risk protection benefits it already provides to clients' European-listed securities transactions to US stock and US ETF transactions.

Initially, the US securities eligible for clearing through EuroCCP include approximately 100 stock issues and 50 ETFs. EuroCCP expects over time to expand the scope of eligible instruments to further equities, ETFs, and to ADRs.

EuroCCP's clearing service for eligible US issues is open to any trading venue cleared by EuroCCP that offers trading in the securities. Trading will be against US dollars. The new service increases the number of markets cleared by EuroCCP to 19.

Andrew Simpson, head of product management in London at EuroCCP, said: "With our new service, we expect to encourage the development of liquidity in US equities in Europe. European trading firms will have a centralised clearing solution to facilitate their trading of US securities on multiple European trading venues.

"We are leading the way by providing European investors with the most comprehensive array of central counterparty services on a single post-trade platform [See my entry on *****Net Settlement And The Shortfalls Of Clearinghouse Guarantees***** for more info on the wonderful “counterparty services” offered by the DTC and EuroCCP] - and at the same time offer a lower-cost settlement alternative than previously available to firms trading in Europe [Ponzi schemes have very low overhead cost on their trade settlement activity. The EuroCCP is now passing these savings on to firms trading in Europe]. We're focused on delivering services that reflect the demands of firms, making it easier to build trading strategies across multiple asset classes - US and European equities issues, GDRs and Exchange-Traded Funds - and driving down the cost of post-trade."

Reuters reports that LSE, NYSE offer US equity trading in European time.

LSE, NYSE offer US equity trading in European time
Wed Apr 14, 2010 8:16am EDT

* LSE's Turquoise to start April 23, NYSE Arca in Q2
* LSE uses Turquoise arm for strategic moves
* Clearing house EuroCCP and parent DTCC enable initiatives
* EuroCCP eyes greater business via low US post-trade costs

(Adds announcement by NYSE Arca, EuroCCP comment, details)

By Jane Baird

LONDON, April 14 (Reuters) - Rivals London Stock Exchange (LSE.L) and NYSE Euronext (NYX.N) are both launching trading in U.S. equities during European hours on affiliate platforms in a move to boost transatlantic trading.

Clearing house EuroCCP and its parent company, the U.S. monopoly clearing and settlement firm Depository Trust and Clearing Corp (DTCC), are enabling the moves by offering low post-trade costs for U.S. securities.

The initiatives are likely to result in large volumes of transatlantic share trading as low-cost alternative trading platforms take advantage of cheap post-trade costs.

"For the first time, there will be low post-trade costs to trade U.S. stocks," said Diana Chan, EuroCCP chief executive. "This is a step towards transatlantic trading, allowing a few more hours window to trade."

Turquoise, a pan-European trading platform 51 percent-owned by LSE, plans to start by offering trading in U.S. dollars in 175 of the most liquid U.S. stocks, American Depository Receipts (ADRs) and Exchange Traded Funds (ETFs) from April 23, LSE said on Wednesday.
"Trading U.S. securities on Turquoise during European market hours will create new trading opportunities for market makers, spread betting firms, proprietary trading firms and arbitrageurs, and will build a pool of liquidity that institutional brokers can leverage for the benefit of their customers," said David Lester, chief executive of Turquoise in a statement.

Alternative platform NYSE Arca Europe said it would start offering the 100 companies in the S&P; 100 index sometime in the second quarter of this year, with other names likely to be introduced later.

EuroCCP, a relative newcomer that has made limited inroads into Europe's crowded post-trade market, may gain additional clients from its ability to go through its DTCC account to offer the same post-trade fees for high-volume clients as it charges them in the United States.

For the LSE, the move shows how the exchange can use the more nimble multilateral trading facility (MTF) structure of Turquoise to make strategic moves to increase its business.

The Turquoise list will include ETFs based on the S&P; 500 and Nasdaq 100 indexes, MSCI country and regional indexes and major household names such as Citigroup (C.N), Apple (AAPL.O) and Alcoa (AA.N), and ADRs of key European names such as BP (BP.L) and Vodafone (VOD.L), LSE said.

The service will be free for three months and introduce a maker-taker tariff system thereafter, LSE said. In such a system, market players who post bid and offer prices on the electronic trading platform get advantageous pricing.

Deutsche Boerse (DB1Gn.DE) also offers trading in U.S. stocks during European time, using its affiliates Eurex and Clearstream, which act as intermediaries to clear and settle on DTCC.

Chan claimed that EuroCCP's post-trade service will be cheaper -- as low as one-fifth of a euro cent per side for its largest clients, or the equivalent of the one-third of a U.S. cent it charges them in the United States.

Brokers and others will be able to net out their exposures
-- setting long and short positions off against each other to reduce risk exposure -- on Turquoise and on NYSE Arca, and clients large enough to maintain DTCC accounts of their own in the United States will be able to net easily via EuroCCP's account, she said.

EuroCCP also plans to seek UK regulatory approval to allow clients to net their holdings directly with holdings in the United States, she said. (Editing by Louise Heavens)

My reaction: The EuroCCP Fraud continues with the introduction of clearing service for US equity issues.


1) On April 23, Clearing house EuroCCP and its parent company, the U.S. monopoly clearing and settlement firm Depository Trust and Clearing Corp (DTCC), enabled trading in U.S. equities during European hours on affiliate platforms.

2) The list of US securities available for trading will include ETFs based on the S&P; 500 and Nasdaq 100 indexes, MSCI country and regional indexes and major household names (Citigroup, Apple, Alcoa, etc).

3) The new service increases the number of markets cleared by EuroCCP to 19.

Too Cheap to be True

1) The Turquoise' s service to trade US equities will be free for first three months.

2) EuroCCP's post-trade service is incredibly cheap, as low as the one-third of a US cent the EuroCCP/DTC charges in the United States.

EuroCCP is allowing trade netting

1) Brokers and others will be able to net out their exposures (setting long and short positions off against each other during post-trade settlement) on Turquoise and on NYSE Arca.

2) Clients large enough to maintain their own DTCC accounts in the United States will be able to net easily via EuroCCP's account.

3) EuroCCP also plans to allow clients to net their holdings directly with holdings in the United States,


EuroCCP move allows for greater naked short selling of the euro (via net settlement)

Thanks to the EuroCCP' s move, Wall Street firms now can sell US equities, collecting billions of euro. They can then take the opposite side of the trade, netting their settlement obligation at the EuroCCP to zero. Finally, the collected billions of euros are used to buy dollars and US treasuries. Here is an example of how it works:

1) Goldman receives euros from European clients.
2) Goldman buys 100 shares of Apple through Turquoise/EuroCCP on behalf of those European clients.
3) Goldman sells shorts (on its own behalf) 100 shares of Apple through Turquoise/EuroCCP.
4) Since Goldman both owes 100 shares to EuroCCP and is owed 100 shares from the EuroCCP, Goldman' s net settlement obligation is zero.
5) Goldman uses euros to buy dollars and the record amount of US debt the treasury is selling.

(See
*****Net Settlement And The Shortfalls Of Clearinghouse Guarantees***** for more info)

The EuroCCP' s introduction of clearing service for US equity on April 23 was obviously incredibly short-term bearish US equities and the euro.

Dollar Soars after EuroCCP introduces clearing service for US equity issues on April 23



...while the Euro plunges



Dow crashes
over the exact same time period



Schaeffers Research reports that DJIA Plunges 9 Percent to Test 10,000 in Massive Market Sell-Off.

DJIA Plunges 9 Percent to Test 10,000 in Massive Market Sell-Off
Dow, SPX bounce back in late afternoon trading
by Joseph Hargett (jhargett@sir-inc.com) 5/6/2010 3:10 PM

While the major market indexes have since recovered slightly, the Dow Jones Industrial Average (DJIA) plunged more than 9%, and the S&P; 500 Index (SPX) and the Nasdaq Composite (COMP) both plummeted more than 6% in intraday trading. What's more, the SPX even briefly dropped below its 200-day moving average, a long-term trendline that was widely considered a bull/bear market demarcation back in March 2009. ...





While the phrase may now be a cliché, European sovereign debt is being blamed for the massive selloff [Bullshit. Greece was bailed out for now. Naked short selling of US equities to European investors is responcible.]. With Greek citizens rioting in the streets and a critical election in the U.K., the optimism that has spawned from the Greek bailout package has completely evaporated. What's more, there is a growing concern regarding a potential domino effect in the euro zone. Most notably, the Street worried that other profligate countries could follow Greece's lead, with Spain and Portugal topping the list. [The collapse of Greece, Spain, and Portugal BEFORE the US makes no sense. The US is the most insolvent by FAR.]

Conclusion: European Regulators are allowing the DTC (through the EuroCCP) to intergrate into European trade settlement. This is allowing insolvent institution like goldman Sach to naked short sell securities to unsuspecting European investors and place the proceeds into the dollar and US treasuries. When the EuroCCP's net settlement frand comes to an end, European European investos will find out they don't own gold mining shares or brazillian, but worthless IOUs from Goldman Sach.

European Regulators are either corrupt or complete idiots to put the retirement savings of European investors at risk this way. As I wrote in my entry about Europe becoming of a focus of DTCC's "business activities", there is no sane justification for the DTC's EuroCCP expanding role in European trade settlement.

Allowing EuroCCP to gain a dominant role in settling European trades IS IDIOTIC

Doing so puts the retirement savings of European investors into the hands of the completely-bankrupt, cash-starved US government. Given the DISASTROUS track record of US regulators and financial institutions, there is no sane justification for the DTC' s EuroCCP expanding role in European trade settlement.


For more information on the DTCC and its “business activities”, see:

*****Net Settlement And The Shortfalls Of Clearinghouse Guarantees*****

Naked Short Selling The Euro
*****What You Need To Know About Wall Street*****
Great Lecture On (Naked) Short Selling
*****Wall Street Selling Imaginary Treasuries*****
*****Wall Street Addicted To Selling Non-existent Shares*****
*****WHAT IS NAKED SHORT SELLING?*****

As long as European regulators allow the US to raid the retirement savings of European investors, the dollar rally will continue. However, the day the European regulators crack down on the EuroCCP fraud, the dollar will drop like a rock virtually overnight. The EuroCCP is the final fraud in the multi-decade US financial Ponzi scheme.

This entry was posted in Euro_Zone, Financial_Wizardry, News_Developments, Wall_Street_Meltdown. Bookmark the permalink.

9 Responses to The EuroCCP Fraud Continues With The Introduction Of Clearing Service for US Equities

  1. I got distracted writing this entry on the EuroCCP. I will finish my last entry on bees tonight or tomorrow.

  2. dashxdr says:

    Maybe I'm just an idiot, but I have no idea how this article's conclusions follow from the article, or the meaning of it all.

    A one paragraph explanation of this would be very helpful. It's not at all obvious.

    It's like you're saying,

    "Puffbellies now are allowed to clear trades in US pottrzebies. Are these people idiots? The dollar is going to collapse when this comes crashing down."

    It's like you're speaking greek. I just don't get it.

  3. dashxdr said...
    Maybe I'm just an idiot, but I have no idea how this article's conclusions follow from the article, or the meaning of it all.

    A one paragraph explanation of this would be very helpful. It's not at all obvious.

    I added a little to the conclusion. Sorry for being unclear, I plan on writing a longer article on the subject later.

  4. dashxdr says:

    AH! Now it makes more sense. A lot more sense. It dovetails with my opinion about ETF's. All ETF's.

    I believe they are all frauds, every last stinking one of them.

    An investor buying an ETF is like a person betting at an off-track betting site. They placed their bet but their payoff depends on their "bookie" making good on the bet.

    The bookie, in this case (the ETF manager) sets the price of the bet based on how many people take it VS how many take the opposite bet.

    Until the payoff time, the bookie holds onto the cash received. What does he do with it? He puts it into US Treasury bonds paying interest. Because he has a lot of ETF's, he has a lot of cash invested, with all sorts of different bets. But none of the ETF money goes to buy the underlying property the ETF represents. All the money goes to buy US Treasuries. It becomes a fund to be used by the Plunge Protection Team and the Federal Reserve to manipulate every market.

    Now even with all the naked short selling, it isn't clear even whether any of us own any stocks in regular brokerage accounts. Maybe it is just a promise to deliver a share of a stock. ETF's aren't even that.

    It's impossible to know how corrupt the whole system has become.

  5. stibot says:

    I don't get it. If i buy shares using GSux as an broker, GSux is not owner of the shares (unless i'm buying on margin). My understanding is it does not matter if i'm client of GSux because whether i am or not broker is selling short on his account and can not use my shares in such transaction in any legal way.

    For me all that sounds like wild speculation.

  6. Robert says:

    @stibot, basically what will happen is your broker will use your shares to satisfy the hedge fund's short position.

    I'm not really sure how they justify this situation (I'm sure they'll say it's only temporary and thus not a big deal) but I think Eric did a post a while ago about various small print on retail brokerage account terms and conditions that might basically allow them to do whatever they like.

    When I've brought up this issue on stock message boards people have called their brokers and accused them of not keeping enough shares to cover their accounts and the telephone operators have denied doing this.. I guess they're just lying and/or unaware but this seems like one area where the brokers may actually be breaking the law (their operatives denying doing something they obviously are doing).

    One thing that really scares me about all this is that even if you have shares registered in your own name - it might be legally possible for the courts to take them back and award them to someone else under the principal that basically all shares are stolen property, or were transferred in fraudulent circumstances.

    Say the broker goes bankrupt having short sold all it's client's shares to someone who now has the shares registered in their own name - would the broker's clients be able to get the shares back through the courts? I dunno.. most obvious answer is "no", however it might be something to reconsider if there were a major financial collapse.

    @Eric, I'd be very interested in what you think of the UK's CREST settlement system where supposedly the shares end up registered in your own name on the company's share register.. can you think of any obvious loopholes they might be exploiting to operate a system of fractional reserve?

  7. One way to make sure your safe with your brokerage accounts is only hold stocks that pay good dividends.

  8. Robert says:

    @confederate miner, That's something I've heard before, but I'm afraid I doubt that it's really true.

    Shorts may target non-dividend paying stocks more than dividend paying ones but they only pay dividends a few times a year and all it means is the short has to pay a dividend if they're still short at dividend time.

    Many traders routinely short shares right before the dividend payment in the hopes that the share will fall enough post-dividend to cover the dividend payment..

    So.. yea.. while naked shorts may target non-dividend paying shares more than others, the fact that a share pays a dividend does not in any way make it 'safe'.

  9. Natasa says:

    Eric said
    "
    European Regulators are either corrupt or complete idiots to put the retirement savings of European investors at risk this way.
    "

    They are definitely BOTH corrupt AND idiots.
    I have no doubt that they are also in pocket of GS (and other criminal WS banks).

    Eric,

    Thanks for good research.

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