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Jeffrey Sprecher, chairman and CEO for Intercontinental Exchange (ICE), looks back with fondness to a period starting roughly in the year 2000.
“When the companies here went global because of technology, our regulators allowed us to cross borders seamlessly. All of us have contracts that have massive global appeal. But now regulation is balkanizing the markets.”
Position limits are different in different jurisdictions and local regulators want to oversee their local firms, so companies from outside the jurisdiction will be more cautious. That means markets will be fragmented, and data more important, which is one reason ICE recently paid $5.2 billion for Interactive Data Holdings Corp.(IDC).
The markets run by the major exchanges are deep and liquid, but in fragmented markets there is no really good source of pricing data. IDC was a good acquisition, Sprecher explained because “you want to be the provider of data because people will want to reassemble markets.”
“Jeff is where the industry is going,” said Phupinder Gill, CEO of the CME Group. “Market data is a large part of what CME has been doing.” He also agreed that fragmentation was being cased by regulators.
Andreas Preuss, CEO of Eurex, doesn’t think that’s inadvertent.
“I think it is intended. There is a belief that democratization or socialization of access to the fruit of past labor of any of us operating in that environment is wanted. It comes hand in hand with increased fragmentation and an increase in systemic risk as a result of fragmentation. People are trying to turn the clock back on the level of market resilience.”
