November 19, 2018 / 7:05 PM / 6 months ago

Nasdaq Nordic members face fresh capital demand if make Brexit switch

A leaf falls from a tree in front of EU and Union flags in London, Britain, November 13, 2018. REUTERS/Toby Melville

OSLO (Reuters) - Nasdaq’s Nordic clearing house will calculate additional risk-related capital requirements for trading members that move their accounts and positions from Britain to the European Union because of Brexit, the exchange said on Monday.

The new requirements are for the multimillion-dollar buffer fund that shields the market from defaults, the latest of which occurred in September when a Norwegian trader’s failure forced members and the exchange to pay up about $130 million.

The default fund and its relevant mandatory contributions are calculated through Nasdaq’s evaluation of the risk from important trading developments, such as Britain leaving the common market.

“In the coming months, several members of Nasdaq Clearing may carry out account and position transfers as part of a process to set up new memberships or change their memberships from the UK,” the clearing house said in a statement.

To take into account the potential changes in open interest and risk, Nasdaq Clearing will carry out additional calculations of default fund requirements for the entities involved, it added.

A Nasdaq spokesman said changing accounts and positions from Britain to the EU is not mandatory for its members and the changes will only affect how capital demands are shared between members, not the total size of the fund.

Editing by David Goodman

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