IntercontinentalExchange Group Inc.
CME Group Inc.
) announced the receipt of approval from the European Securities
and Markets Authority's (ESMA) to have their own trade repository
in Europe. A trade repository or swap data repository is an
authoritative electronic platform that registers key information
regarding open over-the-counter (OTC) derivative trading.
These regulations are part of the mandates under the European
Market Infrastructure Regulation (EMIR), which require swap
derivatives to be channelized through clearinghouses and increase
databases in order to generate transparency in the swaps
Hence, such trade repositories are built to better collect and
understand information of the fluctuations in trade prices and
volumes. This process will also help the exchange clients to
determine the swaps that can be cleared, which again can aid in
Europe's EMIR is similar to the U.S. Commodity Futures Trading
Commission (CFTC). In Jun 2012, ICE had launched ICE Trade Vault
as the first swap data repository (SDR) that received approval
from the CFTC. Since then, ICE Trade Vault U.S. has accepted over
17 million trades. On the other hand, CME Group operates in the
U.S. through one of only three swap data repositories which were
authorized in Nov 2012.
Accordingly, ICE Trade Vault Europe and CME European Trade
Repository have been given the green signal to submit trades
across all authorized derivative asset classes that include
interest rates, foreign exchange (FX), credit, commodities and
Moreover, the trade repositories of both ICE and CME Group
will be able to accept cleared and non-cleared, bilaterally
settled, OTC and exchange-traded derivatives (ETDs) executed on
venues anywhere in the world.
The attainment of the approval in Europe opens an array of
opportunities for both the companies. It will also provide both
ICE and CME Group with the required swiftness and reliability for
their OTC derivatives.
It is assured that the stringent regulations passed in the
last couple of years were only to minimize risk and maintain
stability. Hence, the exchange giants - ICE and CME Group had
been constantly modifying its infrastructure to suit the new
regulations, which further justifies the granted approvals.
While ICE carries a Zacks Rank #2 (Buy), CME Group holds a
Zacks Rank #3 (Hold). Other better-ranked financial stocks
Bofl Holdings Inc.
Hilltop Holdings Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).
BOFI HLDG INC (BOFI): Free Stock Analysis
CME GROUP INC (CME): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
INTERCONTNTLEXC (ICE): Free Stock Analysis
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