EU Parliament Demands CCPs Act in the General Public Interest
On 23 October 2013, the European Parliament’s Economic and Monetary Affairs Committee (ECON) published a report containing a motion for an EU Parliament resolution on a framework for non-bank RRP. In the motion, ECON:
- calls on the EU Commission to prioritise recovery and resolution of central counterparties (CCPs) and those central securities depositories (CSDs) which are exposed to credit risk;
- expresses its belief that resolution plans for cross-border firms should be based on the presumption of cooperation between authorities in different jurisdictions (an assumption that all regulators may not share – see this blog post for more detail); and
- calls on the EU Commission to ensure that a clearing member’s default fund is exhausted before any losses from a defaulting clearing member can be passed on to a client of the clearing member.
However, of most interest is the request that the EU Commission ensure that CCPs “act in the general public interest”. Unfortunately, ECON does not expand on what it would actually mean in practice or how such a requirement would be enforced. This statement is as laudable as it is vague and it is probably this latter aspect which will result in it being quietly buried. Nonetheless, this is probably just one to log somewhere in the memory bank should there ever be a chance that it sees the light of day at some point in the future.
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