Europe’s vertically integrated clearing houses could delay meeting open access requirements under MiFID II until 2022, according to the head of clearing at a European central counterparty (CCP).
Vertical models across the continent allow participants to trade, clear and settle in a single infrastructure, and are operated by some of Europe’s major derivatives players.
Under new regulations to increase competition, market participants can choose the clearing house independently of the venue on which they execute.
Naturally, the likes of CME, Intercontinental Exchange and Eurex are against the move, and Tomas Kindler, head of clearing, SIX Securities Services, believes they could delay the introduction of the rules.
“If we look at MiFID II, I think the vertically orientated organisations can drag their feet until 2022 to really open up so we have full-scale competition in Europe,” he said.
“That is if they want to delay the process, and we have to assume many of them want to do that. If they embraced interoperability they would have opened up already.”
SIX operates a horizontal clearing house in Europe, along with LCH.Clearnet, representing the portion of the market that has championed open access rules.
A clause included in MiFID II following a political agreement at the start of this year could allow vertical clearing houses to delay implementing open access rules for years to come.
Some participants also believe those CCPs could introduce certain fee efficiencies to keep clients using the vertical model.
Kindler added that he also believes there are too many CCPs operating in the market as mandatory OTC clearing approaches, and that consolidation could be the answer.
SIX acquired Oslo Clearing from Norway’s Oslo Børs in May, in a bid to create a larger and more robust clearing house in response to increasing competition.
“You have too many CCPs particularly those that sit in the other 50% of the European market that is not subjected to competition and are protected in their domestic home markets,” Kindler said.
“The number of players is too high already and very few have been able to gain critical mass.”