Regulatory inconsistency behind Nasdaq clearing delay
Nasdaq OMX Nordic has blamed potential regulatory contradictions for delays to its plans to offer clearing choice, according to the exchange’s head.
Jochumsen, president of Nasdaq OMX Nordic, said there was a real risk recent recommendations from the International Organisation of Securities
Commissions (IOSCO) and Committee of Payments and Settlement Systems (CPSS)
could contradict interoperability requirements in the European
market infrastructure regulation (EMIR).
While EMIR is
mainly recognised as Europe’s blueprint for OTC derivatives reform, it includes
provisions for the criteria national regulators should use for assessing
interoperability requests. Proposals related to this will be thrashed out by
securities watchdog, the European Securities and Markets Authority (ESMA), in
conjunction with the European Central Bank (ECB) and will be presented by the
end of the year. Separately, CPSS-IOSCO last month released standards to ensure the
robustness of financial market infrastructure, barely days after
Nasdaq’s postponement was announced.
“There is some
scepticism within the ECB on the viability of interoperability,” Jochumsen told
theTRADEnews.com. “As long as the proposals relating to how interoperability
requests should be handled are not finalised, there is a risk the model
will be different to what is in place now. This could mean those already offering clearing choice could be forced to make changes.”
Jochumsen added he had spoken recently with ESMA chairman Steven Maijoor and IOSCO
secretary general David Wright and said they both “recognise the importance of
not having any contradictions”.
Nasdaq OMX Nordic
– which runs domestic markets in Sweden, Denmark and Finland – was expected to
offer clearing choice between EuroCCP,
the European clearing arm of US post-trade utility Depository Trust and
Clearing Corporation, Swiss clearer SIX x-clear and the exchange group's
incumbent central counterparty (CCP) EMCF last month.
of the exchange group’s plans drew fire from industry bodies in the Nordic
region, a number of which has reportedly prepared the systems in anticipation
of multiple clearers. While Nasdaq OMX has not set a date for interoperability,
Jochumsen said the exchange would revisit the issue in September.
markets in the region have moved ahead with their plans to offer clearing choice,
irrespective of the finalisation of new rules.
On 6 January, BATS Chi-X Europe, the recently merged entity that completed its technology
migration yesterday, launched full four-way interoperability schemes involving the
MTFs’ incumbent clearer EMCF, Anglo-French CCP LCH.Clearnet, SIX x-clear and
EuroCCP. Turquoise also offers a similar scheme, while Equiduct, the regulated
market majority-owned by Citadel Execution Services, became the latest to
embrace interoperability, after announcing plans to hook up with EuroCCP last
If Nasdaq OMX
Nordic met its April deadline, it would have been the first exchange to offer a
choice of more than two clearers. Jochumsen stressed the delay was not
influenced by the continued reluctance of other domestic markets such as NYSE
Euronext and Deutsche Börse to commit to clearing choice.
“We are getting
regulation on interoperability because it appears that policy makers are
disappointed more progress has not been made since the introduction of
MiFID,” he said. “Unlike other exchanges, we are committed to a level playing
field and we see the need for European equity trading to have interoperability
in place to have an efficient system.”