Europe plans regulatory change to tackle market fragmentation

The European Commission plans regulatory changes to enable the consolidation of markets in Europe and tackle the fragmentation holding back the competitiveness of Europe's financial services industry.

Speaking at the opening of the FIA IDX conference in London, Alexandra Jour-Schroeder, deputy director general of the European Commission's Directorate-General for Financial Stability, Financial Services and Capital Markets Union, said there are too many exchanges and clearing houses in Europe.

She told the delegation on Tuesday: "I’d say it is time to start to assess the possibility to further integrate our capital markets in the European Union."

Jour-Schroeder said there are 14 central counterparties, 27 central securities depositories and many exchanges in Europe, which adds to the complexity of trading in the bloc.

"We have to look into that. We need to identify the regulation … which somehow stands in the way of the consolidation of market infrastructure. We will study this very seriously and from there discuss with you what can be done," she added.

The comments came after the head of the FIA backed the further development of the Capital Markets Union in Europe, a key political objective in the region.

Walt Lukken, president and chief executive officer of the lobby group, told the delegation on Tuesday: "There is a real opportunity to continue to grow these markets and make them competitive in Europe and beyond. This is also an opportune time to take stock and examine the goal of developing and strengthening the Capital Markets Union in the EU."

Lukken added: "The FIA and its members strongly support developing more choices for capital formation and investment wherever clients need funding for growth, including the EU."

BNP Paribas welcomed in February the European Commission's agreement on EMIR 3.0 regulation to force European interest rate derivatives clearing into Europe and away from London.

Speaking at a Eurex conference in Frankfurt, Gaspard Bonin, the French bank's deputy global head of derivatives execution and clearing, said: “Today we have a text. Are we happy with it? I would say we are not unhappy."

He added: "What is interesting is that, even though the text is fairly recent, we have seen some reactions from the various stakeholders and nobody is extremely happy but nobody is horrified either so it’s a balanced compromise, which is the best outcome we could have hoped for.”