Three exchange groups granted last-minute reprieve from this Mifid II rule

The City regulator and its German counterpart have allowed three of the world's largest exchange groups to delay the implementation of new rules designed to boost competition.

Deutsche Borse, Hong Kong Exchanges and Clearing (which owns the London Metal Exchange) and Intercontinental Exchange (Ice) all applied for a reprieve from one element of the controversial new Markets in Financial Instruments Directive (Mifid II) which came into force today.

The rule is designed to ensure "open access", as it aims to allow investors to choose where to trade and clear their products by preventing exchanges and clearing houses tying this to a specific venue.

But Mifid II allowed exchanges to apply for a delay to this rule, meaning the open access requirements would not apply until July 2020.

The UK's Financial Conduct Authority confirmed this morning that it had received applications for this delay from Ice Futures Europe and the London Metal Exchange.

It said that "having taken into account the risks" to the "orderly functioning" of those venues, if the open access rule was applied immediately, it had "decided to agree a transitional arrangement for those entities".

Germany's financial watchdog, the Federal Financial Supervisory Authority (Bafin), made a similar decision with regards to Eurex Clearing, ultimately owned by Deutsche Borse. The German exchange had cited the uncertainty caused by Brexit as a reason for wanting the extension.

The decision is a setback for the London Stock Exchange (LSE), which has been a fierce advocate of open access. It said that Mifid II would cause a "revolution" in European derivatives trading and clearing, making financial markets more "fair and transparent".

The LSE even set up an open access derivatives venture, CurveGlobal, along with Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Goldman Sachs, JP Morgan, Société Générale and the Chicago Board Options Exchange.

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