European authorities in the UK and Germany have granted futures trading venues exemptions from the implementation of the MiFID II rules under a MiFIR provision for a transitional period. Eurex in Germany and ICE Futures and the LME in the UK have been granted a 30-month extension in a transitional arrangement for exchange-traded derivatives.
The FCA and BaFin are the competent authorities that granted the futures exchanges exemptions after the venues submitted applications under Article 54/2 from the EU-wide MiFIR regulatory framework.
Exchange-traded derivatives are being granted something of a special status due to the risks resulting from the application of the access rights to exchanges. BaFin and the FCA decided to grant a transitional arrangement to the venues in order to maintain the orderly functioning of the trading venues.
ICE Futures Europe and LME will not be required to consider open access requests insofar as they relate to exchange-traded derivatives. The transition period will expire on the 3rd of July 2020.
The new MiFID II rules have been designed to grant a more transparent access to the markets. Starting from today, the 3rd of January 2018, under Article 35 of the MiFIR, trading venues have the right to non-discriminatory access to a CCP, provided that certain conditions are met.
Bond and Equities Trading Volumes Drop
As the European markets opened for the first day of trading under MiFID II, bond and equities trading volumes declined. The changes to the EU clearing industry proposed under MiFID II are expected to increase the links between London and the rest of the EU.
The changes are particularly sensitive in light of the ongoing Brexit negotiations and the complex regulatory restructurings that other companies have been forced to go through.
Commenting on the launch of MiFID II, the Chair of the ESMA, Steven Maijoor, said: “What we can see, for our part, is no glitches so far. For the first time, we see data of all financial instruments in the EU.”
It is still too early to draw any conclusions based on data from the first hours of trading. In a typical seasonal decline, trading volumes across major venues were lower in the final weeks of December and are still low by historical standards in the first days of 2018.
One brokerage shared that client business was barely going on as the new rules were implemented today. According to TP ICAP Plc, which is the largest inter-dealer broker in the world, trading volumes in bonds, swaps, and some other off-exchange traded securities are lower across the board on Wednesday.
Late last year, investment firms were granted a six-month extension relating to the implementation of LEI numbers.