Newedge, the derivatives brokerage, is planning a push to clear more equities deals in a quest to win business from high-frequency traders and hedge funds.

The Paris company intends to leverage its dominant position in listed derivatives by managing more of its clients' collateral across a range of markets and geographies, tapping into electronic trading groups' penchant for efficiency.

Newedge has been working on the plan for months, but it gained fresh momentum in November with new rules governing the way electronic traders access U.S. securities exchanges.

"It's a game-changing opportunity for us," said Peter Buckley, a former executive with trading firms Athena Capital Research LLC and Tower Research Capital LLC, who joined Newedge as a managing director in September.

The company, formed in January 2008 from the fusion of futures brokerages run by Societe Generale SA (SCGLY, GLE.FR) and Credit Agricole SA (CRARY, ACA.FR), is the largest non-bank derivatives broker in the U.S., according to figures from the Commodity Futures Trading Commission.

As a clearinghouse member firm on major derivatives exchanges including Chicago's CME Group Inc. (CME), Newedge handles the execution of customers' trades as well as managing the collateral posted to clearinghouses against their outstanding transactions.

By expanding into securities clearing, Newedge will play a similar role for more trading firms that do not directly clear their own share trades with the National Securities Clearing Corp., the unit of the Depository Trust & Clearing Corp. that handles buying and selling on U.S. stock exchanges. The approach will be replicated on share-trading platforms around the world, Buckley said in an interview.

Newedge currently handles trading in more than 100 million U.S. shares a day; the busiest U.S. clearers are estimated to do several times that number.

Newedge will compete with firms including Wedbush Securities Inc., Penson Worldwide Inc. (PNSN) and Fortis Bank Nederland, which handle the lion's share of U.S. equity clearing for proprietary trading groups, while negotiating for more securities business from traditional Newedge clients such as pension funds.

"There's no reason we can't do both," he said.

Buckley said Newedge saw an opening after the Securities and Exchange Commission in November banned "naked access," a practice that has allowed some traders to do business on U.S. stock exchanges anonymously and bypass broker-level risk controls. About 30% of market activity is carried out via this sort of pathway, according to an estimate from Lime Brokerage.

Major providers of this access also serve as clearing firms for electronic trading firms. Under the new U.S. rules, traders will next year be required to have their stock orders evaluated for risk by their brokerage firm, a move that will help level the playing field for new entrants like Newedge, Buckley said.

"If we can come up with the best pre-trade risk tool, we go to the top of the deck," he said. "We believe we will have the lowest latency solution available."

Other current users of naked access could register as broker-dealers themselves, though these firms would still need a clearer. Beyond Newedge, major banks are also seen angling for a piece of the business.

A key test for Newedge's initiative will be building enough securities business for the firm to register among the most active clearers on stock exchanges that pay rebates for trading activity. If Newedge can build a critical mass of customers that move enough shares per day to claim the highest rebate, the company will be able offer more favorable terms to price-sensitive traders, Buckley said.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com