Six deploys Nasdaq's post-trade technology for equities, indices and derivatives

Following the launch by Six of an end-to-end and fully integrated digital asset trading, settlement and custody service last week, the Swiss exchange has deployed Nasdaq's post-trade technology for pan-European equities and Nordic derivatives.

Switzerland's stock exchange said last week that it is building the Six Digital Exchange (SDX), a fully integrated trading, settlement and custody infrastructure for digital assets, and today announced that it will overhaul its clearing services for pan-European equities and Nordic derivatives with Nasdaq's post-trade technology.

Nasdaq will provide Six with its clearing and real-time risk management technology, alongside its financial framework index technology to support Six's index business.

Six currently uses Nasdaq's matching engine for trading in equities, exchange-traded funds (ETFs), structured products, funds and fixed income, and it also uses Nasdaq's Smarts market surveillance technology and pre-trade risk management, according to Thomas Zeeb, head of securities and exchanges at Six.

"Nasdaq has a proven long-term relationship with Six (i.e. for trading technology), said Zeeb. "The assessment of their clearing technology let to the conclusion that all our requirements (functional and financial) could be met."

The objective is to provide an efficient clearing infrastructure which shall meet the functional requirements of the current systems and additionally allow the extension of further asset classes, said Zeeb.

"Six has already developed a package of value-added solutions including its advanced settlement and advanced tax reclaim - aimed at financial institutions seeking to significantly reduce their operational complexity as well as operational risks, and eliminate redundancies within a given end-to-end process chain," said Zeeb. "And we are committed to enhancing this package to ensure that we continue to create sustainable value for our clients, and our clients' clients - the end investors. A chatbot is a recent example."

To increase security, the exchange has replaced its "Safeword Token" authentication solution "which is reaching the end of its lifecycle and risks no longer meets today's high security standards" with a mobile software solution from Futurae, according to Zeeb.

"This is the new standard in usable authentication," he said. "This new type of authentication is very user-friendly and, depending on the option selected, works without any user interaction."

The Swiss exchange has had a "very successful year" in the ETF space with over 180 listings in 2018 vs 144 in 2017, trading turnover remains high with over CHF60bn traded so far, and it's well on track to at least match the CHF116bn for 2017, according to Zeeb. "To strengthen the ETF segment further and provide buy-side participants an equal service they know from equities we will introduce a closing auction in our autumn release," said Zeeb, noting that this will lead to an official closing price for ETF's and facilitates the performance calculation for investors.

On the listed structured products side of things, however, trading volumes remain low, despite a positive trend in the number of trades with +8% ytd vs last year - "which indicates an increasing interest from investors to engage again in this segment", according to Zeeb.

"Recent investments into the trading platform resulted into efficiency gains which were passed on the market in form of lower listing fees, we expect more listing in the second half of the year, enlarging the offered portfolio for investors available on our trading platform," said Zeeb.

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