A recurring theme at this year’s IDX London was navigating the many challenges facing the financial sector. In this video, NASDAQ OMX Group’s Hans-Ole Jochumsen talks to John Lothian News about three such challenges – exchange competition, allocation of technology resources, and the global regulatory environment.
In June 2014, NASDAQ OMX NLX, the company’s platform for euro- and sterling-denominated interest rate derivatives, celebrated its one-year anniversary. The platform launched into a crowded exchange space at a time of ultra-low interest rates, which has certainly been a challenge.
Though its volume and open interest have been growing steadily, and market share in certain products such as Euribor have achieved 15 percent market share, some participants view NLX as having fallen short of expectations. Jochumsen disagrees. “If you look at the history of new ventures, not that many have been able to come so far in one year’s time.”
Perhaps an even greater challenge, though, has been in the design and implementation of new technology systems and the proper allocation of technology resources among the varying needs of different customer groups. The problem is especially difficult when one considers the length of time required for big changes, combined with the “non-linear” pace of new regulation.
Speaking of regulation, one regulatory challenge for exchanges and clearing houses is the requirement that trades be cleared through a central counterparty. Though the move from a directive to a single EU-wide regulation has been, in the words of Jochumsen, “cumbersome,” he says the “level playing field for clearing in Europe is more in place, and that all customers will benefit.”