Ice: EU regulation simplification not happening in practice

Ice Clear Europe president says excessive EU checks distract firms from addressing real financial risk

Risk.net montage

Key points

• EU regulators have been trying to simplify rules to ease regulatory burdens on firms.
• But Ice Clear Europe president Hester Serafini says they’re still hindered by a regulatory focus on smaller issues at the expense of larger risks.
• Serafini said they received 175 ad hoc requests from UK and EU regulators, compared to 35 from their US counterparts.
• Regulatory scrutiny is described as “very, very burdensome”, with detailed compliance explanations required for every element of the technical standards.

These summaries are generated by an LLM, but edited by humans.

Despite EU officials promising simpler and more focused rules, the president of Ice Clear Europe says market infrastructures are still burdened by excessive regulatory demands that may distract from real risks.

Speaking at the Futures Industry Association’s IDX conference in London on June 18, Hester Serafini acknowledged that while regulators are attempting to reduce the load on firms, this ambition is not playing out in reality.

“While we hear the politicians and the seniors at the European Securities and Markets Authority [Esma] talk about simplification and risk focus, what their staff does day-to-day is actually not that,” said Serafini.

“What you end up risking is that you focus a lot of time on small things that don’t really matter, and you don’t spend enough time on the real risks. And the regulator, too, doesn’t spend enough time on the real risks that really matter, and understanding those,” she added.

We receive tons of [regulatory] requests, but we are not sure that it really allows us to focus on where we think we should focus on

Maylis Dubarry, Societe Generale

This year, Ice Clear Europe received five times more ad hoc requests from UK and EU regulators than its sister central counterparty Ice Clear Credit received from US regulators, said Serafini. Both clearing houses are deemed systemically important by regulators.

Ice Clear Europe received 175 ad hoc requests from the Bank of England and Esma combined, said Serafini, compared with 35 requests received by Ice Clear Credit from the Commodity Futures Trading Commission and Securities and Exchange Commission.

Serafini said the clearing house also received the same ratio of scrutiny from UK and EU regulators regarding inspections, remediation issues and the introduction of new features.

Serafini noted that regulators often scrutinise each line of the regulatory technical standards, requiring institutions to explain how they comply with each element. This occurs during annual reviews or when the clearing house seeks to introduce new features or products, which Serafini described as “very, very burdensome”.

Out of focus

Also on the panel, Maylis Dubarry, global head of prime services products at Societe Generale agreed regulatory demands may distract from more pressing issues.

“We receive tons of [regulatory] requests, but we are not sure that it really allows us to focus on where we think we should focus on,” said Dubarry.

Reviewing regulatory burdens has become a focus of regulators globally this year. In January, the Trump administration issued an executive mandate requiring regulators to eliminate 10 rules for every new regulation enacted. In Europe, Esma has consulted with the market to reduce regulatory reporting burdens in line with the European Commission’s goal of simplifying its rules.

However, Matthias Graulich, chief commercial officer and member of the executive board at Eurex, said Esma has been “too prescriptive” in interpreting the updated level one text of the European Markets Infrastructure Regulation, known as Emir 3.0, regarding the approval process for new products and features in its proposed regulatory technical standards.

He did note, though, that regulators seemed receptive to industry feedback, and said he hoped the next iteration would see improvements.

Editing by Lukas Becker