Michael Spencer, one of the most prominent figures in the City of London, has called for increased competition in the exchange-traded derivatives sector, and described the regulatory failure to address monopolistic behaviour among derivatives exchanges as "incredible".
His comments come ahead of a European Commission antitrust probe into the $10.2bn proposed merger between NYSE Euronext and Deutsche Börse, which would creat a derivatives giant accounting for more than 95% of European listed derivatives trading.
Spencer, who is the chief executive of interdealer-broker Icap, said: "Customers don’t want monopolies, but the existing models of derivatives exchanges are monopolistic. It’s incredible that this issue hasn’t attracted the attention of the antitrust authorities before”.
Industry participants hope that the antitrust probe, due to commence shortly, will lead the Commission to break open the silo model and force exchanges to license the intellectual property of their contracts.
However, Spencer said he was hopeful that the antitrust decision would be timely enough to allow firms to exploit commercial opportunities being created by other broader regulatory reforms to the derivatives sector. He said: "I think there is a very big prize here, but the question is: will an antitrust review make the decision this year? I don’t think we will get any change without that."
© Financial News
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