EMIR paving way for non-bank clearing partnerships

Buy-side firms may struggle to access markets as banks withdraw from clearing services.

Clearing partnerships between market access providers and non-bank firms could take off as the European clearing mandate rolls out for the buy-side.

More banks are looking to shrink their clearing businesses in the face of heightening regulatory costs. This has allowed some non-bank firms to come into the space and fill the void.

However, smaller buy-side firms are struggling to find a route to the market as the banks continue to retrench their clearing business.

As a result, partnerships between non-bank future clearing merchants (FCMs) and market access providers could be on the cards as the clearing mandate under EMIR rolls out for the buy-side.

Speaking to The TRADE Derivatives Gerry Turner, executive director for Object Trading said: “In Europe market participants are now very pre-occupied in making sure they can deliver to what the regulations say. The [EMIR clearing] deadlines are fairly tight for them.

“So non-bank FC Ms, which are dealing in these [clearing] services, are working with us [technology providers] because we can offer the infrastructure that they may not have in place. Therefore collaboration is definitely going to be the way forward as EMIR pans out.”

Object Trading has most recently partnered up with G.H. Financials to provide direct market access to the ASX 24, Australia’s interest rates derivatives exchange, enhancing G.H. Financial’s connection to the buy-side.

G.H. Financials is one the world’s leading non-bank FCMs, and is a general clearing member of Eurex Clearing and ICE Clear Europe.