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MiFID II open access to CCPs called into question 

June 15, 2015

Elliott Holley, Banking Technology

As the European Commission’s MiFID II legislation moves towards implementation of technical standards, some of Europe’s national regulators are seriously worried that mandatory open access to CCPs may not be such a good idea. Concerns about the ability to manage risk and the ability to effectively handle data were highlighted by speakers at the IDX FIA conference in London yesterday.

“A CCP must be able to contain all the risks it is introducing,” said Sander van Leijenhorst, senior supervision officer, Netherlands Authority for the Financial Markets. “The whole point is to mitigate risk. If there is a regulatory requirement to provide access to a venue, but the CCP can’t mitigate the risk from that venue, that’s not good. Forcing the entire industry to access each other’s infrastructure is not good if it means that CCPs can’t mitigate the risk.”

Under MiFID II, trading venues and clearing houses will have to open up to any participant that meets the minimum criteria. The rules are intended to introduce a level playing field for securities trading and clearing in Europe – but opinion is divided about whether CCPs are sufficiently robust to handle a potential crisis.

To make matters worse, between MiFID II and EMIR, which focuses on derivatives, market participants will have to gather and submit vast quantities of data about their trading activity. While originally intended to bolster transparency and prevent a rerun of the financial crisis, some participants are concerned about the viability of the new rules, particularly given their enormous scope.

Read more: BankingTechnology

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