LONDON (Reuters) – The Intercontinental Exchange (ICE), one of the world’s biggest commodity exchanges, is shifting the trading of some oil contracts to the United States, the exchange said in a statement, as customers balk at new European Union rules.
The EU’s revamped Markets in Financial Instruments Directive, known as MiFID II, aims to curb speculative trading and make markets more resilient. The rules came into force last week.
ICE said in a statement that 245 futures and options contracts in North American oil and natural gas liquids would move to ICE Futures U.S. instead of ICE Futures Europe. It said the transition would take place on Feb. 19.
The exchange said in a statement that the decision came about after “the recent growth in demand for execution in certain North American energy contracts in the U.S. and ICE’s acquisition of NGX.”
The statement did not elaborate on the reason for the growth in demand but sources familiar with the matter said it stemmed from MiFID II.
The new rules, which have come into force a year late, have been criticised for adding a heavy burden to the financial industry as a push for transparency has increased the amount of reporting on deals among other changes.
ICE’s largest and most liquid oil futures WTI, Brent and gasoil will stay in Europe and all energy trades, including those moved to the U.S., will still clear in London.
For oil in particular, the burden from MiFID II comes from new position limits on contracts and the need to register or apply for an exemption with European authorities.
Major oil traders said last year they were exempt for the time being as paper trading is ancillary to their physical positions.
Reporting By Julia Payne. Editing by Jane Merriman
(C) Thompson Reuters