While progress has been slow on achieving interoperability between Europe’s cash equity central counterparties (CCPs), it is unlikely that the European Commission (EC) will step in and mandate links between clearing houses any time soon for fear of causing more job losses across the continent.
Few links have been established between CCPs in the three years since the EC introduced its voluntary Code of Conduct for Clearing and Settlement, designed to stimulate interoperability between post-trade providers in Europe, prompting expectations of a more forceful EC directive if more CCP links were not forged quickly.
However, Phillip Silitschanu, senior analyst at research and consulting firm Aite Group, thinks regulatory intervention is now unlikely until at least 2010 or 2011.
“Regulators know if they hand down a mandate that says ‘By 200X you must have interoperability’ that is going to translate into more efficiency, lower costs and more job cuts, because you don’t need 1,000 people in the back office clearing trades in every single country,” Silitschanu told theTRADEnews.com. “You would have thousands of people in the business being laid off and every 1,000 votes counts. I don’t think Brussels wants that blood on its hands.”
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