Shearman & Sterling advised SIX x-clear AG (x-clear), a subsidiary of SIS Swiss Financial Services Group AG, on successfully obtaining the first non-EU securities-based designation under the Settlement Finality Regulations. Switzerland is outside the EU. This designation requires the approval of both the FSA and the Bank of England.

This is the first non-EU designation since CLS Bank but is more significant as it applies to equity securities traded on all the platforms cleared by x-clear under English law rules. It provides various protections from normal EU insolvency laws where a member defaults and gives precedence to x-clear’s default arrangements and finality to trades unsettled at the time of default. Under this designation x-clear is able to operate on a level playing field with EU clearing houses within the EU regulatory architecture.

The designation is also essential to the success of x-clear’s interoperable arrangements and links with other EU clearing houses. It secures insolvency law protections between x-clear and other EU clearing houses with which x-clear has interoperable links.

Interoperability allows a choice between clearing houses in the context of trading on various equity markets in Europe. x-clear achieved its groundbreaking arrangements to become an interoperable clearing house and central counterparty alongside LCH.Clearnet Limited upon approval by the FSA earlier this year. Shearman & Sterling is also advising x-clear on acting as clearing house to several MTFs (multilateral trading facilities), which include interoperable clearing arrangements with other European clearing houses such as EuroCCP.

In October 2009 Shearman & Sterling’s work for x-clear, setting up the second clearing house for the London Stock Exchange, was praised as "standout" in the 2009 Financial Times Innovative Lawyers award for legal expertise in financial services.

The Shearman & Sterling lawyers advising x-clear are Financial Institutions Advisory & Financial Regulatory Group partner Barney Reynolds, counsel Azad Ali and associate John Adams in the London office.