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.