SIX Securities Services and Clearstream plan to team up and create new services to cut costs for the Swiss and European markets.

Expensive regulation, pressure to reduce margins and increased competition are all factors behind the potential move.

Both firms are now focused on fleshing out the details that will lead to a memorandum of understanding targeted for mid-December.

Clearstream acts as an international central securities depository (CSD) while SIX Securities Services is Switzerland’s own CSD.

“Though discussions are still at an early stage, I am convinced that both SIX Securities Services and Clearstream have a number of complementary and mutually beneficial opportunities to explore together,” Thomas Zeeb, division chief executive of SIX Securities Services.

“Ultimately, should we prove successful, our clients both in Switzerland and abroad stand to benefit. Not just from the potential cost-savings that such an approach could represent, but also from the significant value we can provide through a suite of new services that we either already have in the pipeline or would develop jointly with Clearstream.”

Earlier this week Six Securities Services appointed blockchain firm Digital Asset to work on distributed ledger solutions for Switzerland’s securities market.

“Our industry is undergoing a profound change in the way it structures itself and in how it needs to perform,” Zeeb added.

 “We believe that sustainable success in the future will be defined by collaboration focused on providing true value for clients."

Jeffrey Tessler, Clearstream's chairman and member of the executive board of Deutsche Börse, added: “This is the latest milestone in a joint project tasked to identify mutually beneficial strategic opportunities on core international and domestic business.

“The cooperation is intended to improve the client offering as well as our respective market positioning. It comes in the context of a post-trade ecosystem undergoing change on an unprecedented scale.

“The corresponding cost increase for market infrastructure and their clients calls for innovative service solutions and greater focus on economies of scale.”