The Association of Corporate Treasurers (ACT), in a joint letter (below) to Michel Barnier, Commissioner for Internal Markets at the European Commission, has highlighted the danger that proposed financial markets legislation fails to constrain the trend towards concentration across the derivative trading and clearing landscape in Europe. The signatories to the letter urge the Commission to introduce explicit and detailed open access requirements within the proposed European Markets and Infrastructure Regulation. The joint signatories are drawn from the issuer or user side of the market along with investors, brokers and intermediaries, indicating the breadth of the concern felt by those active in the European financial market. With changing regulations and market conditions in coming years, the ACT's concern is for non-financial companies and others, which use derivatives primarily as hedging instruments, that are likely to need to make greater use of derivatives traded on exchanges and other facilities rather than directly with banks. Companies will thus be concerned about competition in post-trade services including clearing. Martin O’Donovan, Deputy Policy & Technical director at the Association of Corporate Treasurers commented:
The organised trading facilities or exchanges are for a significant part of the market vertically integrated with a clearing house and do not allow access to competition from other clearers. We are already seeing significant merger activity in this space, so the impending threat to competition is very real unless safeguards for market infrastructure are in place. It is all the more pointed in that the letter to Commissioner Barnier draws support from all sides of the market.
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