Liffe Fee Changes Could Presage MiFID II World; Regulatory Process Moves Forward Under ESMA

Trade publication Futures & Options World reported on pricing changes at IntercontinentalExchange Group's Liffe in which trade-execution fees were cut while the clearing portion of the fee went up. While the total cost of making a trade remains unchanged, lowering trading fees sharply may reduce the incentives for any new competitors to price compete and allow incumbents to preserve the value of their clearing operations. Exchange companies often adjust pricing, and it's hard to say precisely what drove this change. But we think this sort of approach may gain traction over time as the coming update to European market rules--known as MiFID II--moves closer. The full switch to the new regulatory framework is likely still years away, but this step by ICE could be a sign of things to come, in our view.