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clarification of buy-in rules – we can expect the industry to pay close attention to this matter in 2023 . Tim Beckwith , head of commercial development , Cboe Clear Europe
In 2022 , we have seen double-digit percentage growth in European repo volumes , both in GC pooling and the repo market . This trend will clearly continue in 2023 . With rising inflation , a changing rates environment and increased volatility , initial margins have gone up considerably . With all that , efficient funding and subsequently financing collateral management will be key for the upcoming year . In addition , the temporary central clearing exemption granted to pension funds by the European Commission is going to expire in June 2023 . All these factors mean that the number one priority for 2023 is going to be that the buyside will be looking for cleared repo and linking that with their derivates contracts . Repo plays an integral role in the financial markets providing a key source of funding and a substitute for unsecured deposits . The special and general collateral segments enhance the utility of the repo market by providing a means of financing securities portfolios and a mechanism for sourcing valuable collateral , which is of critical importance given the scarcity of high-quality assets . Phil Simons , global head of FIC derivatives and repo sales at Eurex
As volatility has returned to FX this year , liquidity has become more of a premium to market participants . More and more OTC market participants will be turning to futures and options listed on all-to-all streaming electronic order book for both price discovery and differentiated liquidity in 2023 . The final phase of UMR in September was a key milestone for FX market structure , but it will take time for market participants to adapt . We have already seen that there are potentially significant margin savings to be made from trading centrally cleared listed FX options versus traditional uncleared OTC FX options for those impacted . The reopening of the annual AANA calculation window in March 2023 may act as a further catalyst for investment managers to alter their approach . FX futures are not included in the ANNA calculation , making them a helpful complement to FX forwards without impacting the threshold . Paul Houston , global head of FX products , CME Group
Regulatory reform of global capital markets will continue to influence the trading landscape in 2023 and beyond . Cost transparency and payment for order flow ( PFOF ) is a growing focus for regulators around the world but differing opinions on dark pools and alternative trading systems is creating divergence that will ultimately lead to increased market fragmentation in the year ahead . Market data pricing is another priority for regulators , but standardising data across jurisdictions requires consensus from regulators , exchanges , selfregulatory organisations ( SROs ), broker-dealers and third parties - a highly complex undertaking and a process that will result in a lack of harmonisation between markets ( e . g ., UK and EU ) as they build out their own agendas for capital markets growth . This increasingly complex , and in some cases
fragmented , regulatory agenda will have a disproportionate impact on smaller firms , with the time , tech and expertise it takes to be compliant increasing fixed costs and subsequently impacting the bottom line . Therefore , heading into 2023 , we expect to see more mid-sized firms turning to outsourced solutions to build efficiencies and avoid the rising cost of high-quality execution , focusing instead on fiduciary obligations to clients . Matt Short , equity trading desk manager , BNY Mellon Pershing
88 // TheTRADE // Q4 2022