CCPs

It is a clear goal in the post-2008 financial landscape to push towards risk mitigation and transparency. Mandates such as clearing and reporting are being phased in to ensure both pillars are built into financial markets, but how can they be guaranteed? Through the posting of collateral against trading activity.

The European regulator, ESMA (the European Securities and Markets Authority), has so far deemed the rules and their regulatory outcome around central clearing to be equivalent to its own standards in Japan, Singapore, Australia and Hong Kong, with the frameworks in Canada, Mexico and India expected to follow shortly. The big name missing from this list is the US.

The European Commission and other global regulators are assessing the options by which to deal with the failure of a central counterparty clearing house (CCP).

Thomas Murray Data Services recently met with the European Commission market infrastructure division in Brussels. Here is a summary of the main talking points arising from our meeting:

ESMA (the European Securities and Markets Authority) has, thus far, approved 14 European based CCPs (central counterparty clearing houses) for reauthorisation under EMIR (the European Market Infrastructure Regulation). A further eight* are awaiting approval.

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