Clearing houses: Presidency and Parliament reach political agreement on recovery and resolution
The EU is stepping up its rules to make clearing houses safer and address systemic risk that could arise from their potential failure.
The Presidency of the Council and the European Parliament today reached a deal on a common set of rules for central counterparties (CCPs) and their authorities to prepare for and deal with financial difficulties. Following finalisation of technical work, the political agreement will be submitted for endorsement by member states' ambassadors to the EU.
"The current context, characterised by important volatility and uncertainty, reminds us of the vital function clearing houses play to make our financial markets safer. By putting EU rules in place to deal with their potential failure, we are adding an essential piece of legislation to secure confidence in our financial system."
Zdravko Maric, Deputy Prime Minister and Minister of finance of Croatia
The proposed rules aim at providing national authorities with adequate tools to manage crises and to handle situations involving failures of key financial market infrastructures. They build on the same principles as the recovery and resolution framework applying to banks.
The main objectives of the reform are:
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-to reduce the probability of CCP failure by introducing effective incentives for proper risk management;
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-in case a financial difficulty would effectively arise, to preserve CCPs' critical functions, to maintain financial stability, and to prevent taxpayers from bearing the costs associated with their restructuring or resolution.
The new rules will take into account the global and systemic nature of CCPs. They will provide for close coordination between national authorities in the framework of "resolution colleges" in order to ensure that resolution actions are applied in a coherent manner taking into consideration the impact on affected stakeholders and financial stability.
Find out more on Council of the EU webpages.