Leaders Talk Regulation, Competition, Sustainability, Value of Being In Person Again
Stuart Williams was on the exchange leaders panel for U.K. regulated exchanges at the FIA’s IDX 2021 this week, along with London Metal Exchange CEO Matthew Chamberlain and London Stock Exchange Group CEO Murray Roos. John Lothian News caught up with Williams over Zoom after the panel for details on what he and his fellow exchange leaders discussed.
Williams is the president of ICE Futures Europe and he was happy to be back at an in-person industry conference, a sentiment shared by the other panelists. Discussions like this one are better in person, Williams said.
The U.K .exchange leaders had the perfunctory discussion about how well the industry as a whole performed during the pandemic, then spoke about the impact of regulation, with the U.K. government right-sizing regulation post Brexit.
They discussed products the exchanges are working on, with LSEG’s Roos talking about ESG products. The role of carbon pricing was discussed as externalities that are woven into the energy use equation.
Competition was also discussed, particularly as it related to the difficulty of starting new exchanges. ICE has opened a new exchange in Abu Dhabi and LSEG recently announced it was shutting CurveGlobal. ICE Futures Abu Dhabi has open interest near 50,000 contracts and average daily volume near 5,000, Williams said.
Williams said London did not see the surge in retail interest in equity markets that the U.S. experienced, but that after a sharp drop in trading in single-stock futures and individual equities last year due to concerns about dividends, both products rebounded nicely. He also mentioned the interest in the FTSE 100 and FTSE 250, with the FTSE 250 product perhaps better representing the U.K. economy as a whole. The ICE MSCI index contracts have also seen interest as a way to play emerging markets versus the developed world.
Brexit was mentioned a couple of times, but we are past “peak Brexit” dominating discussions like this, he said. The focus now is on regulatory change and tweaking the new rules put in place 10 years ago after the 2007-08 financial crisis.
There was a discussion about the challenge of meeting the net-zero goal of 2050 while also doubling energy production to meet the needs of an emerging Asian middle class. This is going to be a heavy lift from everyone to meet these different goals and the markets are going to have to play a role, they said.
Lastly, Williams spoke about the transition away from Libor and how ICE has set up automatic moves to new contracts for those who don’t move their position by themselves before the deadline to end Libor’s use.