Two of Europe’s largest derivatives exchanges were granted a deferral by UK and German regulators from complying with open access, on the day MiFID II went live for traders.
The UK’s Financial Conduct Authority (FCA) awarded the last-minute reprieve to ICE Futures Europe and the London Metal Exchange (LME), one day after the German regulator BaFin gave similar relief to Eurex, Europe’s largest futures exchange.
The FCA stated the two exchanges would not be required to comply with the open access rules for exchange-traded derivatives until 3 July 2020, and
The UK watchdog also explained the extension was granted to ensure “orderly functioning of the trading venues.”
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 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.
Jeff Sprecher, CEO and chairman of ICE, has been an outspoken critic of MiFID II and open access, beliving 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.
The deferrals for the two exchanges come despite frequent reiterations from the European Securities and Markets Authority (ESMA) that there would be no open access exemptions for listed derivatives.