Four leading market operators are pressing the European Securities and Markets Authority to take a strict approach in drafting the regulatory technical standards to implement the open access provisions in MiFID II. These provisions are intended to encourage competition by preventing trading venues and central counterparties from discriminating against their competitors.
The four companies—ICAP, LCH.Clearnet Group, London Stock Exchange Group and Nasdaq—warned in a March 30 letter to ESMA that the rules should not allow market operators to deny a request for open access for reasons that are “spurious, duplicative or lack objectivity.” The four companies also called for ESMA to set up a “rapid appeal process” to deal with disputes over access.
Not all European market operators agree with this view, however. On April 17, Eurex, Euronext, Intercontinental Exchange, the London Metal Exchange and four other market operators sent a letter to ESMA cautioning the regulator from going too far in implementing the open access requirements. The eight companies stressed the potential risks of forcing interconnections among systemically important financial market infrastructures in the derivatives markets, and urged ESMA to “clearly define objective and applicable conditions for denying and accepting access requests.”
Under the open access provisions of MiFID, CCPs must clear financial instruments on a non-discriminatory and transparent basis regardless of the trading venue on which a transaction is executed. In addition, trading venues should provide on request trade feeds on a non-discriminatory and transparent basis to a CCP that wishes to clear transactions traded on the relevant venue, and both CCPs and trading venues must be given non-discriminatory access to benchmarks.
