The European Securities and Markets Authority (ESMA) has ruled out a temporary exclusion for listed derivatives from the incoming open-access regime, marking a victory for the London Stock Exchange Group (LSEG) which have campaigned to open up competition in derivatives clearing.
The open access rule, set out in MiFID II, will overhaul Europe’s trading venues and clearing houses and encourage competition in exchange-traded derivatives (ETD).
After conducting a 30 day review of the possible exemption, ESMA found open access to ETDs “does not create undue risks to the overall stability and orderly functioning of European financial markets.”
The review could come as a blow for organisations that operate vertical silo models such as IntercontinentalExchange (ICE) and CME Group.
Open access will allow market participants to trade futures contracts on one exchange and clear with a different central counterparty (CCP) of their choice.
Last year, the LSE, Nasdaq OMX, ICAP and LCH.Clearnet backed the open access proposals, arguing that it should not be possible for a CCP or trading venue to deny access based on the criteria that can be arbitrarily decided by the CCP or trading venue itself.
“Strengthening competition and choice between venues and CCPs is an important step to further the integration of the EU’s capital markets. The open access provisions of MiFID II will help to achieve these goals for all instruments without creating undue risks to stability,” said Steven Maijoor, ESMA chair.