ICE chief Sprecher bullish on MiFID II prospects

Jeff Sprecher is confident on growth in Europe due to MiFID II, but continues to criticise the open access regime.

The Intercontinental Exchange’s (ICE) chief executive has expressed his optimism regarding MiFID II in Europe as a direct result of increased demand for regulatory products.

Speaking on ICE’s quarterly earnings call, Jeff Sprecher told investors the exchange operator had seen a 29% surge in fourth quarter signings for MiFID II related pricing and analytics services.

He added that for the month of January, there was a 40% increase in adoption of those products for clients on a global basis, including those in Europe.

“The other thing that’s really encouraging is though we have designed these products, the BestEx, the liquidity indicators to meet specific requirements of MiFID II customers in the US and Asia are starting to see the efficacy of using those products as well,” Sprecher said.

“I am encouraged that those products will continue to be in demand in Europe, but also we will start to contribute more and more to the growth we are seeing in the US and also in Asia.”

However, Sprecher highlighted that concerns around MiFID II‘s open access rules for derivatives are continuing to trouble market participants in Europe.

“There is a concern across Europe whether or not the way that [open access] provision operates makes sense in the future without the UK as a part of the EU, and whether it makes sense to help drive the economy together and finance the real economy without overly fragmenting markets and creating a lot of inefficiencies,” he said.

Sprecher added the industry could see changes or modifications specifically to the open access rules, and possibly MiFID II on a broader level.

In January, ICE Futures Europe and the London Metal Exchange gained exemption from the open access regime until 3 July 2020.

MiFID II’s open access rules entitle 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 completely separate group.

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.

Sprecher has historically been an outspoken critic of MiFID II and open access, stating the rules will stifle competition and favour only the incumbent clearing houses.