NEWS UPDATE
DERIVATIVES
UK scraps open access regime for derivatives in latest regulatory divergence
The open access regime for exchange traded derivatives will be scrapped in the UK but it will continue to support the regime for the equity and OTC derivatives markets .
The UK has confirmed plans to axe the open access regime aimed at increasing competition in cross-border derivatives trading and clearing in the latest sign of regulatory divergence from the EU post-Brexit .
The decision follows a review of the open access regime by the HM Treasury in December to assess its suitability for the UK markets as they no longer fall under the jurisdiction of EU regulation .
Under the regime , trading venues and clearing houses can allow non-discriminatory access to their services , meaning traders can trade a future on an exchange and clear it at a central counterparty ( CCP ) owned by a separate group .
The UK had largely been in favour of the rules with London-based clearinghouse LCH already operating an open access model . However , other clearinghouses such as Eurex and ICE operate under a vertical model meaning that derivatives traded on their exchanges must be cleared through their own CCPs .
The implementation of open access has been hit by several delays . In June 2020 , the European Parliament confirmed the regime would be delayed for one year until July 2021 just two weeks before it was due to be imposed because of disruptions caused by the coronavirus pandemic .
“ HM Treasury has concluded that the open access regime for ETDs , which was originally designed to improve cross-border capital markets in the EU , is not suitable in a UK-only context ,” said the HM Treasury in its statement .
The Treasury added the open access regime will remain in place for equity and over the counter derivatives , and that it will conduct a broader review of the wholesale financial markets to increase future openness and competitiveness .
EQUITIES
Equities traders looked to high-touch trading in volatile market
Survey by JP Morgan found that nearly a third of equities traders said their use of high-touch trading had increased during the pandemic .
Just under 30 % of equities traders increased their use of high-touch trading during 2020 , according to a recent equities survey by investment bank JP Morgan .
The poll of 200 equities traders globally revealed that 28.1 % had changed their execution strategies to incorporate more high-touch trading while working from home between March and June last year .
At the same time , 29.5 % of traders said their use of high-touch blocks had increased since this time last year , while 47.5 % said engagement with hightouch blocks remained the same as in previous years .
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