All Euronext securities transactions begin with a trade through a European exchange on either
the electronic order book
a multilateral trading facility (MTF)
or in the OTC (over-the-counter) markets
Clearing is performed by a central counterparty (CCP). The CCP guarantees both sides of the trade, thereby mitigating counterparty risk. The CCP acts as a buyer to every seller and a seller to every buyer in a transaction, stepping in to complete a trade if one party defaults – a process called novation.
The CCP nets all the gross trades in a given security to generate a single net settlement instruction. Settlement, the final link in the change-of-ownership process, occurs at a central securities depository (CSD) through the DVP (Delivery-versus-Payment) process.
Euronext currently has relationships with two CCPs providing clearing services for its markets:
Settlement for trades on Euronext is provided by
Euroclear - A cross-border settlement services provider
EuroCCP - A pan-European CCP and settlement services provider
Interbolsa - The Portuguese national Central Securities Depository owned by Euronext
These arrangements ensure that trades are processed efficiently and cost-effectively.