Experts discuss evolving EU and UK regulation landscape

FIA webinar explores equivalence, EMIR 2.2 and MiFID II framework

23 April 2021


As the review of core European financial market regulations continues unabated, FIA brought together a panel of representatives from the derivatives industry to share their views on the current and emerging regulatory landscape.

Moderated by Corinna Schempp, FIA's head of EU policy and regulation, the panel discussion on 21 April touched on areas impacting cleared derivatives markets, including EMIR 2.2, equivalence and the next steps for the MiFID II framework.

On equivalence, Haroun Boucheta, head of regulatory and methodology at BNP Paribas, noted that a lack of coordination between the EU and the UK in the application of their respective derivative trading obligations has generated a significant shift in trading volume to US venues.

"This is especially true for firms that are active within the EU 27 and have a branch in London," he said. "It's not a perfect situation for the EU, because it will be hard to relocate volume that has already gone to US SEFs."

Virginie Saade, head of government and regulatory policy at Citadel in Europe, emphasised the importance of equivalence for both global and regional stakeholders.

"Across the whole chain of market participants, from investors to issuers through intermediaries, equivalence brings market dynamics together by creating an alignment of standards," Saade said. "Equivalence is a catalyst, as it ensures easy access to markets, simplicity, efficiency, robustness in the way you trade and clear instruments across one or several regions, and it brings scale through competition. All these elements are key in order to allow for market growth."

Vicky Veliou, head of market structure and regulation at Eurex, said that in an ideal world the industry would have reciprocal market access, but as there is not it is important to host discussion forums where differences and any divergences can be discussed.

"When I read the press and I see statements from the UK that there will be the biggest shakeup in financial markets, this is not helping," she said. "This is something we need to continuously work on, and I hope that the regulators and legislators find a basis where we can discuss the various topics."

Caroline Dawson, a partner with Clifford Chance, added: "The UK is eventually going to make policy decisions on where it wants its financial framework to go and that isn't necessarily going to be perfectly aligned with the EU approach."

"But we do have these commitments in the memorandum of understanding on both sides, for the UK and the EU to continue to participate in international standard-setting bodies and continue to implement the recommendations that those standard-setting bodies set out," she said.

The panel also examined key aspects of the functioning of the European Supervisory Authorities among other topics, discussing to what extent regulators have taken on board industry responses and developments, and what remains to be done.

The full discussion can be viewed here in an archived video of the FIA webinar.

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