Banks Urge EU Lawmakers to Back Derivatives Competition Plan

Banks in the European Union are urging lawmakers to drop their opposition to plans for boosting competition in the clearing of derivatives trades, saying the proposals would spur economic growth.

“Choice and efficiency in clearing services is essential to support Europe’s economic growth,” Werner Frey, a managing director at the Association for Financial Markets in Europe, said in an e-mail. AFME represents international lenders including Deutsche Bank AG (DBK) and BNP Paribas SA. (BNP)

Members of the European Parliament’s Christian Democrat, Socialist and Liberal groups have said they intend to fight proposals from Michel Barnier, the bloc’s financial services chief, to force exchanges to share trade data with rival clearinghouses, amid fears the move would threaten market stability. This has brought them into conflict with lenders, who are urging the assembly to support the draft law.

EU antitrust officials vetoed merger plans by Deutsche Boerse and NYSE Euronext in February after concluding that the combination could threaten competition for trading in some derivatives. Barnier urged Joaquin Almunia, the EU’s antitrust chief, to take the competition-boosting effect of the draft law into account when deciding whether the merger should be permitted.

“Open access is a key element to enable choice and competition in this marketplace,” AFME’s Frey said.

The legislators’ push to remove the data access provisions from the draft law is backed by Deutsche Boerse AG (DB1), which warned yesterday that Barnier’s plans will endanger market integrity.

“Only rare circumstances justify restricting competition and transparency,” Richard Portes, professor of economics at the London Business School, said in an e-mail.

“Of course incumbents lobby politicians for such restrictions, but Deutsche Boerse’s claims are self-serving and do not make a convincing case,” Portes said.

To contact the reporters on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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