Nasdaq OMX is postponing the planned April introduction of competitive clearing in the Nordic cash equity markets due to uncertainty surrounding interoperability requirements from regulators and industry groups.
“Nasdaq OMX has strived to pursue a competitive cash clearing model since 2009, when we first announced our intent,” says Hans-Ole Jochumsen, president of Nasdaq OMX Nordic. “We are convinced that it will act to drive liquidity and lower investor costs, thus benefiting our clients and the European capital market as a whole. However, there is still uncertainty regarding the detailed requirements for interoperability even though there is a political agreement regarding European market infrastructure regulation (EMIR). There needs to be clarity and a level playing field in this area before we can introduce interoperability.”
Cash equities interoperability has been agreed in EMIR, but the technical issues are still outstanding, Nasdaq OMX says. The European Securities and Markets Authority (ESMA), coordinating with the European System of Central Banks (ESCB), is expected to release the technical standards by the end of the year.
The Committee on Payment and Settlement Systems and the technical committee of the International Organization of Securities Commissions (CPSS-IOSCO) is also working on its principles for financial market infrastructures. The principles replace the three existing sets of industry standards, including the core principles for systemically important payment systems (2001); the recommendations for securities settlement systems (2001); and the recommendations for central counterparties (2004). The group is also proposing to release its principles by the end of this year.
Nasdaq OMX says that while EMIR and ESMA guidelines supersede the code of conduct on areas they govern, it is necessary to determine interaction with the remaining parts of the upcoming CPSS-IOSCO code. Furthermore, additional EU legislation, such as MiFID, will have to be incorporated.
Reporting by Christopher Gohlke, Global Custodian, an Asset International publication