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In light of the recent publicity surrounding ICE Clear, LIFFE Clear and the prospect for a Clearing and Settlement Code of Conduct for listed derivatives, the Futures and Options Association (FOA) today announced the appointment of Oxera, an independent economics consultancy, to survey a broad cross-section of market participants and organisations involved in the listed derivatives market on the impact of exchange-integrated clearing. The focus will be on its advantages and disadvantages; the different views on whether or not there is any identified adverse impact on market competition” attributable to exchange-integrated clearing; and, whether or not “interoperability” is a practical way forward and, if so, what are the key specifications for any such model.
Steve Sparke, Chairman of the FOA, said: “Many market participants have become uncomfortable with the pricing power and lack of competition that an Exchange’s “ownership” of the Open Interest in derivatives contracts can bring. However the same market participants have struggled to agree on a model that they would like to see promoted. One of the purposes behind the survey is to define “interoperability” and whether it is a practical “deliverable”. The survey will bring us closer to defining a competitive model for the future that the market participants can start to promote.”
Anthony Belchambers, Chief Executive of the FOA, added: “Whilst the FOA recognises that exchange-integrated clearing has the capability of delivering operational benefits and enhanced revenues for an exchange, it also raises considerable and legitimate concerns over its impact on competition in the market. This survey – which will be undertaken over the next four months –will make a vital contribution to assessing its impact.
Reinder Van Dijk, Managing Consultant, Oxera, said: “We see this survey as an opportunity to capture and describe the views of market participants on issues such as the effects of exchange-integrated clearing, which are central to the debate on the organisation of trading and clearing of listed derivatives in Europe.”
