Featured Product

    Benoît Cœuré of ECB on European Central Counterparties after Brexit

    June 20, 2017

    Benoît Cœuré, Member of the ECB Executive Board, spoke at the Global Financial Markets Association in Frankfurt. He discussed central clearing, along with its importance and implications for financial stability in the context of Brexit.

    Mr. Cœuré began his speech by highlighting the importance of central counterparties (CCPs) in reducing systemic risk and ensuring financial stability. He added that now the challenge is to ensure that CCPs themselves do not become a risk to financial stability. He detailed the role played by the existing rules, such as the CPMI-IOSCO standards for CCP risk management and European Market Infrastructure Regulation (EMIR), and the regulatory bodies in the supervision of CCPs. Next, he discussed the importance of UK CCPs for the stability of the euro, also highlighting that, as per ECB estimates, the UK CCPs clear nearly 90% of the euro-denominated interest rate swaps of euro area banks and 40% of their euro-denominated credit default swaps. Therefore, Brexit is a cause for concern in the future regulatory treatment of central clearing. He also added that the current EU regime regarding third-country CCPs was not designed to cope with major systemic CCPs operating from outside the EU. Consequently, the UK’s decision to leave the EU is prompting a significant rethink of the European approach to the supervision of systemically important global CCPs.

     

    Most of the EC proposals in this area "merely replicate the approaches already followed by many other major jurisdictions," added Mr. Cœuré. He, however, welcomed the recent EC proposals to amend EMIR and highlighted that there has been significant focus on one aspect of the recent EC proposal—that is, the ability of the EC to deny recognition to a CCP that poses excessive risks to the financial stability of the EU and to require it to establish itself in the EU if it wishes to provide clearing services in the EU. This would be just one of the tools available to EU authorities under the revised EMIR proposal. Ultimately, however, it will be up to the EC and the EU legislators to decide on the specific conditions for triggering such a requirement, in the context of the forthcoming legislative discussions. On its part, ECB is carefully examining the EC proposal and plans to issue an opinion on it in the coming months, said Mr. Cœuré.

     

    Related Link: Speech

    Keywords: Europe, ECB, Securities, CCP, EMIR, Financial Stability

    Related Articles
    News

    SEC Adopts Rules and Amendments Under Regulatory Regime for Swaps

    SEC announced that it took a significant step toward establishing the regulatory regime for security-based swap dealers (SBSDs) by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Act.

    September 19, 2019 WebPage Regulatory News
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    BIS Formalizes Agreement to Set Up Innovation Hub in Hong Kong SAR

    BIS and HKMA signed the Operational Agreement on the BIS Innovation Hub Center in Hong Kong Special Administrative Region (SAR).

    September 18, 2019 WebPage Regulatory News
    News

    PRA Proposal on Probability of Default and LGD Estimation

    PRA proposed, via the consultation paper CP21/19, an approach to implementing EBA’s recent regulatory products relating to Probability of Default (PD) estimation, Loss Given Default (LGD) estimation, and the treatment of defaulted exposures in the internal ratings-based (IRB) approach to credit risk.

    September 18, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    CFTC Extends Comment Period for Proposals on Cross-Border Clearing

    CFTC announced that it is extending, until November 18, 2019, the comment period for the proposal for an alternative compliance framework for derivatives clearing organizations (DCOs) that are organized outside of U.S. and that do not pose substantial risk to the U.S. financial system.

    September 18, 2019 WebPage Regulatory News
    News

    BNM Publishes Financial Stability Review for the First Half of 2019

    BNM published Financial Stability Review for the first half of 2019.

    September 18, 2019 WebPage Regulatory News
    News

    APRA Observations from Thematic Review on Recovery Plans of Insurers

    APRA issued a letter to general insurers and life insurers, outlining observations from a recent thematic review on recovery planning by insurers.

    September 18, 2019 WebPage Regulatory News
    News

    FASB Issues Summary of Tentative Board Decisions at September Meeting

    FASB published a summary of the tentative decisions taken at its Board meeting in September 2019.

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3848