CCPs the way forward for Eurex
10 July 2014 Frankfurt
Image: Shutterstock
Central clearing significantly reduces systemic risks and their amplifying factors in financial markets, according to a whitepaper by Eurex Clearing.
In addition, the paper states that the regulatory agenda to broaden the use of central counterparty (CCP) clearing together with high regulatory requirements makes financial markets more robust and transparent.
“The whitepaper shows the macro-prudential advantage of a centrally cleared market versus a bilateral one, CCPs demonstrated their resilience and benefits during the recent crisis,” said Thomas Book, CEO of Eurex Clearing.
“As the new regulatory regime takes shape the positive features of cleared markets will be further strengthened. Of great importance are the recovery and resolution frameworks which ensure that systemic events can be managed appropriately.”
The second part of the paper outlines the necessary standards and features that need to be met when operating a CCP. An analysis of past disruptions of CCPs against regulatory requirements shows that EMIR, the European post-trade regulation, already sets highest standards and can serve as a regulatory benchmark globally.
The final part of the paper discusses the ways in which the CCP mechanism permits markets to recover, or be wound down, if unprecedented market shocks overwhelm the existing safeguards without disrupting the entire financial markets.
In addition, the paper states that the regulatory agenda to broaden the use of central counterparty (CCP) clearing together with high regulatory requirements makes financial markets more robust and transparent.
“The whitepaper shows the macro-prudential advantage of a centrally cleared market versus a bilateral one, CCPs demonstrated their resilience and benefits during the recent crisis,” said Thomas Book, CEO of Eurex Clearing.
“As the new regulatory regime takes shape the positive features of cleared markets will be further strengthened. Of great importance are the recovery and resolution frameworks which ensure that systemic events can be managed appropriately.”
The second part of the paper outlines the necessary standards and features that need to be met when operating a CCP. An analysis of past disruptions of CCPs against regulatory requirements shows that EMIR, the European post-trade regulation, already sets highest standards and can serve as a regulatory benchmark globally.
The final part of the paper discusses the ways in which the CCP mechanism permits markets to recover, or be wound down, if unprecedented market shocks overwhelm the existing safeguards without disrupting the entire financial markets.
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