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EXPERTS IN
GLOBAL FINANCIAL
MARKET STRUCTURE

EXPERTS IN
GLOBAL FINANCIAL
MARKET STRUCTURE

EXPERTS IN
GLOBAL FINANCIAL
MARKET STRUCTURE

EXPERTS IN
GLOBAL FINANCIAL
MARKET STRUCTURE

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Market Structure Partners is a specialist, independent, strategic advisory firm.
We provide advice about how evolving technology, changes in regulation and emerging trends impact underlying capital markets infrastructure all over the world.

Market Structure Partners was instrumental in writing a report for the Australian bank and brokerage community that contributed to the discussion about competition in clearing which led to this recent decision:

On 30th March 2016, the Australian Treasurer released a statement announcing “a reform package that opens the door to competition in the clearing of cash equities, acting on the recommendations of the Council of Financial Regulators’ (CFR) Review of Competition in Clearing Australian Cash Equities.”

More information on the consultation with links to key documents can be found here.

…At the least, a counterbid could force Deutsche Boerse to increase its offer, one of the people said. “LSE is clearly a highly sought after strategic asset,” said Niki Beattie, head of Market Structure Partners, which advises brokers and exchanges. “Deutsche Boerse has probably been doing the courting for longer than ICE, so I think they’re coming from behind.” …

…Executives and analysts alike say the LSE is officially “in play” after it revealed last week it was in talks about an all-share “merger of equals” with Deutsche Börse. On Tuesday ICE indicated it too may make a bid. “The LSE is a pretty hot target and is a massive foothold in European financial markets. Now the LSE is in play you can’t afford not to be a bidder,” said Niki Beattie, head of Market Structure Partners, a consultancy. … Ms Beattie, a former bank head of electronic trading, thinks a deal for the LSE will happen after years of unconsummated bids. “I think that’s why the banks won’t lobby against it this time — the cost savings [from netting margins] will be too great for banks exhausted by regulatory issues.”

“I think it’s not necessarily about synergies and cost savings for the exchanges themselves — although they should have them from clearing and technology combinations,” said Niki Beattie, head of Market Structure Partners, which advises brokers and exchanges, in a phone interview. “It’s more about the opportunity to create a European super exchange before one of the U.S. exchanges or Hong Kong Exchanges & Clearing Ltd. take that opportunity away.”

“…Just as MiFID enabled a light to be shone on the pricing of equity execution, that focus on cost, wherever it resides in the transaction value chain, will only continue. The current suite of regulatory initiatives will simply require firms to examine costs across different segments of their business processes. Banks are particularly challenged with the complexity of dealing with the current waves of change presented by each regulatory initiative, in all the various jurisdictions where they operate…”

…”Das ist eine interessante Sache in Europa: Es gibt so viel Wettbewerb – warum sind dann alle so abhängig von der Hauptbörse?”, fragt Niki Beattie vom Beratungsunternehmen Market Structure Partners in London. “Einer der Gründe ist, dass der Wettbewerb eben nicht so stark ist wie in den USA.”…

[Translation]…”That’s an interesting thing in Europe: There is so much competition – then why are all so dependent on the principal stock exchange” asks Niki Beattie from consultancy Market Structure Partners in London. “One of the reasons is that the competition just is not as strong as in the US.”…

…“Europe is an interesting one because if there’s so much competition, why is it the case that everyone is so dependent on the primary exchange?” said Niki Beattie, a former head of Europe, Middle East and Africa market structure at Merrill Lynch who now runs consulting firm Market Structure Partners Ltd. in London. “One of the reasons for that is competition hasn’t gotten to the same level as the U.S.”…

…It is doubtful the CFR will be digging into ASX’s cost of capital, considering it has raised capital from ASX shareholders to strengthen the clearing company’s ability to cover counterparty risks and deal with defaults. Nevertheless, there is merit in the arguments put by consultant Market Structure Partners that the ASX do more work on risk calibration to avoid over-collateralisation for market participants…

“…For the moment, the vast majority of instruments migrating to central clearing are IRS, which overall are highly liquid and so relatively easy to value,” says Niki Beattie, managing director of Market Structure Partners, who recently benchmarked Australia’s monopolistic clearing regime against international best practice. “It’s far easier to contemplate failure if the CCP isn’t the pivot for the entire national market…”

But one member of the panel cautioned against trying to replicate the US experience in a European context.

“We’re not the US,” said Niki Beattie, Founder, Managing Director of Market Structure Partners. “We are a very heterogeneous region. It’s very difficult to say that we can fix this with one sweeping solution.”…