Fidessa's Steve Grob looks at the obstacles and opportunities that are likely to arise as a result of the new regulations
Derivatives markets are being
simultaneously reshaped by two separate forces. On one side,
MiFID’s long-planned extension into derivatives
has been given additional impetus by a global regulatory agenda
that aims to reduce systemic risk especially in the OTC
derivatives space. On the other, technology is empowering new
liquidity venues, faster trading styles and providing new tools
to navigate the resultant big data swamp. The opportunity for
market participants then is to understand how they can step
through these changes and create sustainable competitive
advantage. The alternative is to simply comply with the rules
but this is committing to a never-ending game of catch up that
just adds cost to an already strained business model.
This state of affairs shows
little sign of abating. MiFID II, EMIR and Dodd Frank are still
to take final form and, if the experience of equities markets
is anything to go by, we will face an inevitable slew of
unintended consequences as much of this regulation overlaps
either geographically or in terms of subject matter.
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