Plans by European regulators to create a new category of trading venue for shares and over-the-counter derivatives have been met with a chorus of criticism, with a UK government minister calling it “a vague and ill-defined category” that “makes no sense.” The development highlights growing friction between markets and regulators as the European Commission pushes for sweeping changes to the way derivatives are traded, mirroring similar reforms enshrined in the Dodd-Frank act in the US.
Mark Hoban’s concern was echoed by the trade association for Europe’s exchanges, which said the creation of OTFs was an “unnecessary complication” since it would create another type of trading venue on top of exchanges and “multilateral trading facilities” (MTFs). This category was created by MiFID and is used by share trading venues like Chi-X Europe, a rival to national exchanges across Europe.
Burcak Enel, FESE deputy secretary general, said: “We don’t think it’s worth having that category and in derivatives we don’t see clearly why it would be needed, although we are not against it.”
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