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17 May 2012Joséphine de Chazournes
As the European and US authorities are trying to regulate pretty much everything in the financials industry in their "Prudential Regulation" stance to prevent our economies to implode, unregulated entities are thinking about getting a regulated status.. In the news today there is rumour that ICAP, one of the leading inter-dealer broker in the OTC derivatives space, is assessing whether they should buy the Plus Market, the UK exchange for fledgling companies that is planning to close after failing to secure a buyer. Now only four companies in the UK have a regulated market status: the London Stock Exchange, the London Metal Exchange (also for sale), ICE Futures Europe and Liffe, owned by NYSE Euronext. It sounds like a safe bet, an insurance in case Dodd-Frank in the US and EMIR in Europe do not just ask for OTC derivatives trades to be cleared but also be traded on a regulated market. That's a bit far out but you never know how crazy things can go! It's probably going to be a matter of price for ICAP. But for many fixed income players that are eyeing the "post-new-regulation" dealer-to-client market in Europe, and assessing how to best get into it, it has become compulsory to at least get an MTF licence, maybe an OTF licence when we will really know what they will be, and why not Regulated Market status, though costs of maintenance associated with the latter have to be valued carefully, not for the faint-hearted.