How can Europe’s fragmented post-trade environment be tackled by regulators?
The current debate within the European Union on centralised supervision in the long term is strategic. Looking ahead, I think that further supervisory convergence would enhance the efficiency and effectiveness of the overall framework.
However, for such centralisation to be beneficial, it must effectively eliminate the duplications and redundancies inherent in the current supervisory architecture. This condition is essential to ensure a streamlined and improved regulatory environment.
What is the main roadblock for consolidation of the post-trade landscape?
It’s about infrastructures having a critical mass to provide an entry door to European capital markets and support our financial community. It’s not about centralising but having a scale to service clients in a unique way, regardless of where they are.
At Euronext, we believe that for a clearing house to be effective and instil confidence in the market, it should be capable of managing various asset classes and markets. The larger and more diverse the clearing house, the more resilient it becomes.
Do you anticipate Europe following in the US’ T+1 footsteps?
The impacts of such a change to the settlement process are primarily on market participants rather than on market infrastructures. Making a change like this requires increased automation, ongoing harmonisation and standardisation of processes. This transition may require some re-engineering of front and back-office processes by the entire value chain to allow a smooth compression of settlement timelines without detrimental impacts in terms of market liquidity and settlement efficiency. Therefore, appropriate planning, testing and coordination across the industry is expected.
Euronext is following closely the evolution of the T+1 debate across the industry and with policy makers. We believe that, as T+1 will come to Europe too, it will create incentives to further improve the overall settlement process.
What’s the relevance of impending Emir refit?
With the new Emir Refit Regulation (EU) 2019/839, ESMA has made significant changes to the technical standards for reporting, data quality, data access, and trade repository registration with the new Emir Refit Regulation.
Euronext has collaborated closely with industry partners to ensure compliance with the updated Emir Refit standards. We’re committed to ensuring the quality and consistency of our reported data.
What are the next steps in the development of Euronext Clearing in 2024?
Looking ahead, our value proposition is straightforward – a unified clearing house supporting the cash equity and derivatives businesses across all seven Euronext markets, bringing efficiencies across asset classes. We successfully migrated our cash equity markets to Euronext Clearing in 2023. We are now preparing the migration of our financial and commodities derivatives in Q3 2024. This critical milestone will achieve the expansion of Euronext Clearing to be Euronext’s CCP of choice across all our markets.