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Pan-European Market Requires CCP Interoperability

Further research required into high frequency trading; regulators yet to release new rulings.

Regulatory change and where the challenges and opportunities lie was one of the many topics at the top of the agenda at this year’s TradeTech Europe, the World’s largest equity trading and technology summit, which ended last week. For the past eleven years the event has continued to bring the buy- and sell-side together, giving access to various discussions and presentations, which this year looked at effective and efficient regulation change, the trading landscape and high frequency trading, among other topics.

In a panel discussion around how regulation will drive change within the financial industry, Denzil Jenkins, Director of Regulation, Chi-X Europe, commented: “There should be 3-5 major platforms in the European trading landscape to deliver economies of scale and maintain competition. Europe has traditionally been very fragmented, and there is a need to create a pan-European market”.

Mr Jenkins later added in the panel, whose members also included Robert Boardman, Managing Director, ITG; Tim Rowe, Manager, Trading Platforms and Settlement Policy, Financial Services Authority; Laurent Degabriel, Policy Officer, DG Markt, Securities Markets, EU; Lisa Dallmer, COO European Cash Markets, NYSE Euronext; Nick Bayley, Head of Regulation, London Stock Exchange; and Carl James, Global Head of Fixed Income & FX Dealing, BNP Fortis, that “inter-operability in the central clearing space is key to achieving this”.

The panel went on to discuss the challenges around regulating technology, particularly in the high frequency treading space. Tim Rowe, Financial Services Authority, maintained: “The key obstacle that the European Securities and Markets Authority (EMSA) face is that there is currently very little data around high frequency trading. ESMA has been sending out questionnaires to the industry, and will aim to put out a consultation paper, however currently this space is diverse and sparse in centralised data.”

In a separate interview on site around regulating high frequency trading, John Greenan, global multi-asset connectivity manager, BNP Paribas commented: “Essentially the policy makers will draw a line in the sand and everyone will have to fit around that. One of the issues is that the desire to regulate has increased massively since 2008, changing how people are viewing this space. At the high level the SEC is continuing to discuss which direction new rules on high-frequency trades should take, while in Europe there are regulations such as MiFID II. They have not yet made any statements but continue to ask a lot of questions to the various market participants. It does not seem possible in this current climate to have a rigorous and in-depth debate.”

The event attracted over 2200 delegates, including over 700 members from the Buy-Side, to listen to over 150 speakers in six distinct conference streams. The exhibition hall saw over 120 exhibitors, including the London Stock Exchange, Goldman Sachs, Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank, ITG, Knight, NYSE Euronext, SunGard, Thomson Reuters, UBS, XETRA, CA Cheuvreux and ConvergEx.