FIA Expo: Eurex CEO Michael Peters Weighs In On ESG, EU Equivalence

Suzanne Cosgrove

Suzanne Cosgrove

Editor

Making his debut performance at an FIA conference Wednesday, Eurex CEO Michael Peters argued in favor of the drive toward environmental, social and corporate governance (ESG) products and weighed the pros and cons of the European Commission’s equivalence decision for UK CCPs.

FIA President and CEO Walt Lukken interviewed the Eurex exchange leader at FIA Expo-V, pointing out that Peters assumed his new role in the middle of the pandemic, on July 1, when he succeeded former Eurex head Thomas Book.

Peters said Eurex was able to move safely through the turbulence of COVID-19 by maintaining a focus on its employees and their families and avoiding a closure of the exchange. Actions to ensure security included splitting up teams across its global jurisdictions and time zones and making sure Eurex operations would remain up and running in case of a possible outbreak of the virus in-house, he said.

In the meantime, Eurex has kept its focus on industry trends despite the distractions of the virus, Peters said, citing a shift between active and passive investment as well as the rapid development of ESG products as examples.

“Based on discussions with asset managers, there is a clear interest in standardized (ESG) products,” Peters said. “It is our responsibility to provide the indexes.” Some research suggests a convergence between non-ESG and ESG products could take place as soon as 2022, he said.

Eurex launched new ESG futures and options on the DAX 50 ESG and EURO STOXX 50 ESG Indexes on Monday, November 9. The EURO STOXX 50 ESG Index is based on the benchmark EURO STOXX 50 Index, with the ESG version excluding companies with low ESG ratings.

Addressing the topic of a threatened short-selling ban in March during the COVID-19 crisis, Lukken asked,  “How do we do a better job of telling policymakers in Europe and in the U.S. how the markets work and the fact that some of these ideas would do more harm than good?” 

It’s an “interesting challenge” in Europe, Peters said. “U.S. government and regulators are very much market-centric and capital-market-centric. “But the European Union consists of 27 countries, and they have completely different views on how the capital markets work, and how important they are,” as well as differing views on the derivatives markets.

“It was a difficult situation,” he said, but after “constructive dialogue with regulators,” the short-selling ban was not introduced in Germany.  Six European countries —  Austria, Belgium, Greece, France, Italy and Spain — allowed short-selling bans in March that were later removed.

Asked about exchange competition in Europe, Peters said to “look at the landscape of derivative exchanges in Europe. You have Euronext, and of course Eurex and ICE Europe, but that’s it. It’s relatively small.”

Growth at Eurex will largely be driven by new product initiatives, he said, including those linked to ESG and MSCI products, as well as some small-to-medium acquisitions. Deutsche Börse was a bidder for the Milan-based Borsa Italiana, but lost out to Euronext in October.

Peters said he saw some rebalancing of the Eurex customer base with the move to EU standards equivalence post-Brexit. The European Commission granted UK central counterparties temporary equivalency with the EU’s standards under the European Market Infrastructure Regulation for 18 months, from January 1, 2021 until June 30, 2022, after the conclusion of the UK’s Brexit transition on December 31, 2020.

He said Eurex Clearing recently onboarded some 500 banks and customers in the wake of Brexit changes. “It’s a balance,” he said, “between avoiding market disruptions and developing opportunity in case the market wants another venue.”

 

 

 

John Lothian Newsletter

Today’s Newsletter

Wildfires rage in Canada’s oil hub

Wildfires rage in Canada’s oil hub

First Read Hits & Takes John Lothian & JLN Staff Trading Technologies (TT) celebrated its 30th anniversary yesterday, marking three decades of pioneering advancements in electronic futures trading. Founded in 1994, TT initially revolutionized the industry with its...

We visit more than 100 websites daily for financial news (Would YOU do that?)

Now Read This

Veteran Trader George Hanley Reflects on Trading Career and Family Legacy in Part Three of Open Outcry Traders History Project Interview

Veteran Trader George Hanley Reflects on Trading Career and Family Legacy in Part Three of Open Outcry Traders History Project Interview

In the third installment of the Open Outcry Traders History Project interview series, veteran trader George Hanley dives deeper into his trading career, family legacy, and the evolution of his business ventures. Conducted by John Lothian News for the MarketsWiki Education series, this segment offers a comprehensive look at Hanley’s experiences and insights from his time on the trading floors.

John Lothian: Week in Review (May 13-17, 2024)

John Lothian: Week in Review (May 13-17, 2024)

JLN PRESS ROOM PICK OF THE WEEK

MIT students stole $25M in seconds by exploiting ETH blockchain bug, DOJ says

Within approximately 12 seconds, two highly educated brothers allegedly stole $25 million by tampering with the ethereum blockchain in a never-before-seen cryptocurrency scheme, according to an indictment that the US Department of Justice unsealed Wednesday.

George Hanley Reflects on Trading Career in Second Interview Segment of Open Outcry Traders History Project Interview

George Hanley Reflects on Trading Career in Second Interview Segment of Open Outcry Traders History Project Interview

In the second part of the Open Outcry Traders History Project interview with veteran trader George Hanley for the MarketsWiki Education series, Hanley shares insights into his dynamic trading journey.

Hanley was trading every month of soybeans at the MidAm and he was one of the few people at the exchange who figured out how to trade the expiring contract and take delivery, if need be. He opened the necessary banking lines, and one time the last day before expiration, he bought the market limit down and sold it limit up because others were afraid to get caught and have to take delivery, he said.

Greenwood Project CEO Aims to Grow Minority Talent Pipeline for Finance

Greenwood Project CEO Aims to Grow Minority Talent Pipeline for Finance

May 17, 2024 — The Greenwood Project, a nonprofit that prepares minority college students for careers in financial services, is undergoing major changes under new CEO Kwesi Smith to significantly expand its reach and impact. 

Smith, who has two decades of experience as a research analyst and investor, took over leadership of the Chicago-based organization in 2023. He aims to transform Greenwood into the premier talent pipeline for Black and Latino students nationwide seeking high-trajectory finance careers, Smith told John Lothian News in a recent video interview.