Bloomberg News

EU Must Ensure Access for Securities Clearing, Trade Groups Say

October 03, 2011

Oct. 3 (Bloomberg) -- European Union regulators reviewing laws on clearing and post-trade processing must introduce “explicit and detailed” open-access requirements to ensure users have a choice, trade associations representing fund managers, brokers, issuers and investors said.

“Such open access requirements should ensure that a clearing house must accept instruments for clearing regardless of the venue on which they are traded,” seven lobby groups including the Investment Management Association and the Association for Financial Markets in Europe wrote in a letter to the European Commission dated Sept. 30. “A venue must provide data feeds and other assistance to any clearing house that wants to clear the instrument in question.”

European governments are close to a deal on rules for trading of over-the-counter derivatives in the region, two people familiar with the discussions said on Sept. 29. Points of discussion on the draft law have included what access clearinghouses should be granted to trade data from exchanges, whether to fully apply the clearing rules to pension funds, and what powers should be granted to the European Securities and Markets Authority.

“We are concerned that the forthcoming European Markets and Infrastructure Regulation does not take proper account of the likely concentration of clearing provision,” the trade groups wrote in a letter to Michel Barnier, the EU’s financial services commissioner who proposed the original version of the draft law was proposed in September 2010.

Almunia Concerned

EU Competition Commissioner Joaquin Almunia said Sept. 15 he’s “concerned” that a proposed tie-up between Deutsche Boerse AG and NYSE Euronext may monopolize the derivatives market. Customers and rivals have said they are concerned the two would dominate clearing and derivatives.

Some clearinghouses act as central counterparty to every buy and sell order executed on an exchange, reducing the risk that a trader defaults on his obligation in a deal. Customers pay fees for clearing, or post-trade processing services, which include verifying that a buyer has the funds to execute a trade.

--Editor: Andrew Rummer, Srinivasan Sivabalan

To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net.

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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