Time to change your default settings?
London has long been seen as the European capital for financial markets. This has very little to do with regulation – after all, the UK is (still) part of the EU single market. London’s continuing dominance is largely down to ‘network effects’, i.e. the positive benefits of being... Read More
Joining the fray
It was always clear that Brexit was going to be an inherently complex undertaking that the industry must muddle through somehow. By now we’re all quite used to politicians of every stripe selling us their promises and claims, ranging from the more realistic to the less credible. What’s different... Read More
The hard reality of Brexit
Whichever type of Brexit you hope for, there remains the possibility of a UK withdrawal from the EU in March next year with no agreement in place, and no transition period. The European Banking Authority has this week voiced its concerns about what it sees as a lack of preparation on the part of financial... Read More
Become a master of suspense
Starting October 1, 2018, CME Regulatory Advisory RA1720-5 comes into effect. The advisory details the limited use of suspense accounts, which are temporary holding accounts submitted at the time of order entry into Globex, but prior to the allocation of the executions to specific accounts on a carrying... Read More
Brexit fragmentation
MiFID brought market fragmentation to Europe back in 2007. In broad strokes incumbent exchanges lost market share to newcomer MTFs predominantly located in the UK. For UK stocks this meant that the fragmentation occurred within their home country, whereas EU27 stocks moved partly to London. But how... Read More
Bracing for Brexit
There are very few things we can be certain of in regard to Brexit, other than the fact that it won’t be concluded in 2018. It would be premature, though, to dismiss Brexit as topic solely for the policy makers sitting in their ivory tower far removed from the technology and operations that keep financial... Read More
Is the DVC a ban in disguise?
If you had asked me last year what the actual impact of the double volume cap (DVC) would be, I would have said that it’s ridiculously complex to operate but wouldn’t matter all that much because it would likely only impact a few stocks. Seems I was wrong, judging by yesterday’s announcement... Read More
SIs on the rise across asset classes
There’s been much speculation about the revival of the Systematic Internaliser as MiFID II has sharpened its rules. So now that we’re almost two months into the new regime, how is it looking? Luckily the regulators (e.g. ESMA and FCA) publish registers of all their SIs, and the asset class... Read More
Regulatory placebo effect
With great anticipation the industry awaits the announcement of the estimates for the double volume caps, now expected in March. Irrespective of the fact that ESMA has already missed one deadline, and with some in the industry waiting to see if there is any substance to a rumoured further delay, it’s... Read More
Peeling back the layers
Changes to the Large in Scale (LIS) thresholds in MiFID II appear to be relatively balanced at first sight – lower than under MiFID I for shares with a low average daily turnover (ADT) and significantly higher for those with a high ADT (Graph 1). However, include the transparency calculations recently... Read More
ESMA’s third-country venues – the naughty or nice list
ESMA recently issued guidance on the treatment of commodity derivatives traded on third-country venues in the context of the MiFID ll position limit regime. Prior to this is was not clear if commodity derivatives traded on a third-country exchange would be considered economically equivalent OTC (“EEOTC”)... Read More
Pieces coming together
Derivatives market participants have been rightfully concerned about the potentially adverse impact of MiFID II on global trading. However, the US and EU authorities have taken significant steps in recent weeks to mitigate some of those concerns. The CFTC has issued an interpretative letter regarding... Read More
