TRADING VENUES

Euronext gains open access exemption until 2020

Euronext cites Brexit clearing uncertainties following open access ruling.

By Jon Watkins jon.watkins@globalcustodian.com January 05, 2018 1:40 PM GMT

Euronext’s three derivatives exchanges have been granted a deferral from national regulators to comply with open access under MiFID II, the latest exchange group to win relief from the regime.

The rules will not apply to the trading venues in Paris, Brussels and Lisbon until 3 July 2020.

MiFID II’s open access regime entitles trading venues and clearing houses to allow non-discriminatory access to their services, meaning traders can trade a future on one exchange and clear it at a central counterparty (CCP) owned by a completely separate group.

In a statement, Euronext welcomed the decision, particularly in the context of Brexit.

“Euronext, in considering that the financial stability of the clearing environment in Europe is paramount, believes that the transitional exemption is a prudent measure to ensure the orderly functioning of its markets, particularly in the context of Brexit,” said a spokesperson for Euronext.

“We need a resolution of the bigger picture before we move into any open access activities in respect of exchange traded derivatives.”

The EU is involved in a heated contest with the Bank of England to relocate clearing of euro-denominated derivatives from London to the continent, much to the reluctance of many market participants.

Euronext becomes the fourth exchange group to gain a deferral in a matter of days.

The UK’s Financial Conduct Authority (FCA) awarded the last-minute reprieve to ICE Futures Europe and the London Metal Exchange (LME) this week, one day after the German regulator BaFin gave similar relief to Eurex, Europe’s largest futures exchange.

The open access model is the foundation of LCH, the world’s largest clearing house for derivatives, whereas ICE and Eurex operate under a vertical model, meaning derivatives traded on their exchanges have to be cleared through their own CCPs.

Jeff Sprecher, CEO and chairman of ICE, has been an outspoken critic of MiFID II and open access, believing the rules will stifle competition and favour only the incumbent clearing houses.

Meanwhile exchanges such as the LSE, Nasdaq and NEX Group (when it was previously known as ICAP) had backed the open access proposals.