FIA welcomed around 100 attendees from across the derivatives industry to its forum in Brussels on 20 November, where the review of MiFID II, cross-border access to clearing and trading venues and the recovery and resolution of central counterparties came under the spotlight.
In the first panel, moderated by Corinna Schempp, FIA's vice president of European policy and regulation, speakers discussed the upcoming MiFID II review, generally agreeing that the regulation has increased transparency and the data is useful for market integrity.
"We are aware that reporting has been a real effort for the industry, but I can tell you that it was worth it, and we have very positive results," said Patrice Aguesse, head of market and post-market regulation policy at Autorité des Marchés Financiers (AMF).
Tilman Lueder, head of the securities markets unit, DG FISMA at the European Commission, said there is more transparency in terms of regulatory reporting, but he questioned whether pre-trade and post-trade reporting has had a commensurate effect on execution quality.
Speaking about market data, Lueder said that while the Commission is not a price regulator, the market does need a consolidated tape (CTP) that would "democratise access to data". The tape should make post-trade data as near live as possible, he said, but it should not replace proprietary data.
Even if it won’t solve the entire data debate, the introduction of a tape would help avoid concentration in the market and the survival only of players who are able to access proprietary data, Lueder said. He added that the Commission is conducting a feasibility study with market structure partners to which FIA and its members should contribute.
Julia Kolbe, director of regulatory affairs at Deutsche Bank, added that she has observed a considerable increase in the cost of market data, and while MiFID II has provisions on "reasonable commercial basis", it is not clear how this is put into practice. Aguesse also supported the Commission’s ambition for a CTP, adding that what is needed is standardisation and harmonisation.
In the second panel, chaired by Bruce Savage, FIA's head of Europe, panellists discussed the future of cross-border regulation, Brexit and the impact of EMIR 2.2 on third-country central counterparties. Petr Wagner, deputy head of unit, international affairs at DG FISMA advised that companies should be prepared for any eventualities, including a no-deal Brexit.
Turning to EMIR 2.2, Wagner said that the Commission had taken note of FIA's position on tiering and comparable compliance and is currently working on drafting the Delegated Acts. He also confirmed that, overall, the Commission has a good relationship with the U.S. Commodity Futures Trading Commission and reiterated that EMIR 2.2 hangs on continuous cooperation.
Julien Jardelot, co-head of government relations and regulatory strategy, Europe and head of post trade and technology at London Stock Exchange Group, said that the Commission needs to do more to ensure predictability for the industry, especially third-country CCPs.
Maja Augustyn, a senior advisor at BNP Paribas Securities Services, added that as a clearing member, a key concern is about being able to continue to have access to a global network of CCPs. She underscored the importance to the industry of having an EMIR 2.2 framework that works well and allows clearing members to maintain global market access. Robert Booij, chief executive officer, Europe at ABN AMRO Clearing expressed concerns that the EMIR 2.2 process was being blurred by Brexit.
The day concluded with a one-on-one discussion between Jackie Mesa, FIA's chief operating officer, and the European Commission's Patrick Pearson, head of unit, financial markets infrastructure.
Pearson spoke about the state-of-play of negotiations on the proposed framework for recovery and resolution of CCPs in the European Union. He was hopeful that member states would be able to agree their position shortly, after putting this file on hold for some time to focus on governance of CCPs under EMIR 2.2. Once they do, then trilogue negotiations will start between the Commission and the co-legislators under the leadership of the upcoming Croatian Presidency.
Pearson made clear that a key issue for trilogue negotiations will be the level of skin-in the-game that will be required, with diverging views between the three EU institutions on this question and between industry members depending on whether they are a CCP or a clearing member.
He recognised that it is a difficult debate with good arguments on both sides and that there is no straightforward solution. Being quizzed by Mesa, Pearson explained that he hopes that the legislation on CCP recovery and resolution will never need to be used.
