Thomas Murray - Central Counterparties & Post-Brexit Equivalence

Central Counterparties & Post-Brexit Equivalence

Central Counterparties & Post-Brexit Equivalence

by Tim Reucroft
Thomas Murray | London | 15 October 2020

In this White Paper, Tim Reucroft (Chairman, Thomas Murray Advisory Board) argues that it is not the UK CCPs per se that represent a systemic risk to the European Union, it's the forced movement of positions - which is to be mandated by the EU. 

The author makes the case that: 

  • UK CCPs are currently authorised under the single market and UK laws and regulations are 'super-equivalent', so there should be no issue in acquiring 'third country' qualifying CCP status. 
  • However, the EU is treating the UK unlike any other third country by time-limiting its equivalence - giving EU market participants time to reduce their exposure to UK CCPs, as a sudden movement of positions would be chaotic. 
  • But it is the EU that is mandating the movement of positions - they are creating their own financial instability. 
  • "In effect, the EU is admitting that it cannot compete on a level playing field and is using regulation to distort the markets in its own favour."

While the views expressed in this paper are entirely the author's own, they present a compelling case against the time-limiting of UK third country equivalence on the grounds of fair competition. 

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