VIDEO | The pie is being enough for everyone – we just have to make it less complicated to share. In the session titled “Hear it from the players: the derivatives clearing market panel” at the PostTrade 360° Nordic 2024 conference, EMIR 3.0 was the hot topic that got the ball rolling.  

There’s been many “false starts” with EMIR 3.0, said Christopher Anderson. As a professional in Nordic fixed income sales at Eurex, he expressed hope that “we are not back on stage talking about EMIR 3.0 next year and it’s just done”.

Joanne Donaghey, regional sales director for the Nordics at LSEG Post Trade feels the same. “My concern is that anything too complex and onerous would present risks – in costs and actual risk management – or is indeed simply unnecessary for the industry,” she said.

Anderson believes that there remains too many “question marks” around the regulatory technical standards (RTS). He shared, as an example, the exemption from the active account requirement for market participants who have notional exposure below €6 billion in in-scope derivative contracts. “We don’t know exactly what that means because the regulation has no defined term for what that six billion is.”

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Getting people on board

Perhaps one saving grace is that these uncertainties and complexities are not likely to affect the entire market. “For the largest global institutions and major banks – I don’t see this as being significantly impactful for them,” said Donaghey. “They are very likely already clearing on a balanced basis to comply with the regulation. It is likely to impact the smaller market participants more.”

Francesco Somma, clearing senior sales manager at SIX Clearing suggested that it might be easier to galvanise market participants for EMIR 3.0 if they “try and understand the rationale behind the decision of EMIR 3.0 and the active account requirement”. This includes understanding what it might “translate into in terms of migration of a proportion of euro clearing risk into the eurozone” in the medium to long term.

Somma acknowledged that SIX, as a major financial market infrastructure (FMI), has the onus to “facilitate the impending changes (under EMIR 3.0) and also offer the market an attractive alternative for clearing in the eurozone.” The organisation should perhaps even take it upon itself to mitigate “some of the inevitable costs that will be incurred by the end clients”.

Enough to go around

Market participants should remember that “the euro is global”, and that “the euro market is much bigger than what we see within the EU”, said Donaghey. “It’s a global currency, a benchmark currency. Circa 70 per cent of what we see in euro volumes is generated from outside of the EU.” EMIR 3.0 thus affects only “a smaller component of the euro markets”.

Gabriel Vimberg, head of derivatives clearing at SEB, suggested that due to the significance of the currency, it shouldn’t be difficult for multiple market partcipants to share the pie and thrive.

Donaghey agreed, saying, “Hopefully, we would all advocate for the fact that customers having choice and not having barriers to being able to exercise that choice is really important. All of us would want to say that we’re competing on the value propositions that we can provide and the solutions that we can offer.”

Alessandro Romani, head of European equity derivatives products at Nasdaq believes that EMIR 3.0 has the benefit of “promoting to the buy-side the clearing offerings that are available in Europe, making them more transparent and visible”.

Panellists:
Christopher Anderson, Fixed Income Sales, Nordics, Eurex
Alessandro Romani, Head of European Equity Derivatives Products, Nasdaq
Francesco Somma, Clearing Senior Sales Manager, SIX Clearing
Francesco Valdini, Derivatives Sales and Business Development Manager, Cboe Clear Europe
Joanne Donaghey, Regional Sales Director, Nordics, LSEG Post Trade
James McNulty, Senior Sales Manager, Euronext Clearing

Moderator:
Gabriel Vimberg, Head of Derivatives Clearing, SEB

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