European block trading and specialist algorithmic trading platform Pipeline Financial Group has developed a clearing and settlement solution with BNP Paribas Securities Services and EuroCCP. The idea is to offer a low risk clearing and settlement model to clients trading European equities.

The hybrid clearing and settlement model will allow buy-side and sell-side companies to minimise counterparty risk exposure in the clearing and settlement cycle, reduce associated costs and maintain anonymity when trading block trades and algorithmic orders.

The process enables users to continue to clear and settle trades in standard ways but with significant extra benefits.

Under the structure buy-side customers will have the ability to settle across BNP Paribas' settlement account in a "Model B" arrangement. BNP Paribas will provide counterparty risk management by allowing Pipeline's clients the security of a AA rated balance sheet.

Sell-side companies trading with Pipeline will benefit from EuroCCP's provision of central counterparty services, providing risk mitigation of each trade through EuroCCP.

The combination of a central counterparty with a buy-side settlement process offers sell-side users the potential for additional settlement netting benefits.

The clearing and settlement solution will be available across over 5,000 securities, covering all equity instruments in 14 countries as Pipeline continues its phased European launch over. Pipeline intends to extend the model through the addition of more central counterparty clearing parties (CCPs) this year.

The addition of more CCPs will offer users greater potential netting benefits and provide an anonymous platform for risk free and vendor neutral competitive clearing with increased back office and clearing cost efficiencies.