VIDEO | On stage at the PostTrade 360° Nordic 2024 conference for the session titled “The CCP market game – at strategic level”, a panel of representatives from Europe’s major CCPs were unanimous in their opinion: the game they play today revolves around innovation and risk management. But that was where all agreement ended. The discussion pivoted (perhaps inevitably) to the European Market Infrastructure Regulation (EMIR 3.0), and one thing became clear: the regulation remains a contentious topic for those who are concerned about where the industry is headed.

LCH CEO Isabelle Girolami brought the debate on stage beyond the current panel to the session that preceded it, titled “Unifying the EU’s market for financial market infrastructures – the when, who, and how”. In that session, Corentine Poilvet-Clédière, Girolami’s Paris-based counterpart at LCH SA had called for nurturing “European champions” that can dominate and grab market share, including outside of the union.

Although agreeing to the need for more European champions, Girolami believes that “the solution is not to curtail access to financial industry participants in order to create a strategic autonomy”. She described EMIR as being about “a few transactions that you want to get done in European CCPs”.

“For us (LCH), from a global CCP perspective – not so much a UK one, but a global one, and I really insist on that – we are trying to help the industry navigate the next period in the EMIR implementation,” she said.

She emphasised that “strategic autonomy doesn’t mean I want something on my ground”, as that would create the same issues that are currently hindering the capital markets union (CMU), where every country wants its financial market infrastructures (FMIs) to be locally located. What’s more important is supervision that is geographically agnostic – LCH might not be physically based in the EU, but that doesn’t exempt it from EU rules. “As a global CCP, we are heavily regulated by European regulators,” she assured the panel.

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In the driver’s seat

Matthias Graulich of Deutsche Börse views the regulation in a different light. He reminded the panel that one function of EMIR 3.0 is to “make sure that products that are systemically relevant can be managed by European central banks, by European regulators in crisis situations, with the highest level of autonomy you need to have in order to manage a crisis”.

“You wouldn’t want for some products to rely on support from a third country central bank and hope for their goodwill… Then you don’t have your destiny in your own hands,” he said.

In his opinion, in lieu of “the most efficient CCP”, which would be “one global CCP across currencies and products”, EMIR 3.0 and the bid for EU autonomy “is not necessarily in strong conflict” to attaining efficiency for the bloc.

Room for improvement

Going against the grain of what many may believe of the regulation, Cboe Clear Europe’s Vikesh Patel doubts that EMIR 3.0 “has really looked at competitiveness”. Sharing that product approval currently takes much longer in the EU compared to in the US, he expressed a wish for more rigorous standards targeted at enhancing competitiveness and cautioned against “declaring victory too early on that part of the scorecard”.

Roberto Pecora of Euronext Clearing proposed a number of changes to the regulation targeted at improving the efficiency of implementation. One is a rethink of the requirement for yearly onsite inspections. “It can be extremely cumbersome in terms of cost, in terms of people you need to dedicate (to it),” he said. He suggested more vertical inspections instead of general ones as a potentially more agile and efficient practice.

Panellists:
Isabelle Girolami, CEO, LCH
Matthias Graulich, Global Head Fixed Income, Funding, Financing Strategy and Development, Deutsche Börse
Patrik Löhr, CEO, Nasdaq Clearing
Vikesh Patel, President, Cboe Clear Europe
Roberto Pecora, CEO and General Manager, Euronext Clearing
José Manuel Ortiz-Repiso, Head of Clearing and Repo Operations, SIX

Moderator:
Gabriel Vimberg, Head of Derivatives Clearing, SEB

• The consolidated PostTrade 360° Nordic conference, in Stockholm on 4–5 September 2024, came to host 1,200+ delegates and featured 70 sessions.
• Our coverage relating to the event is indexed here.
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