European Capital Markets Institute

Setting EU CCP policy – much more than meets the eye

More than EUR 3.2 trillion notional outstanding of interest rate swaps (IRS), the most active interest rate derivative (IRD) product, are cleared every day in the City of London, including around 94% of all euro-denominated IRS that are traded globally. Brexit has naturally raised questions around whether London’s central role can continue.

A new CEPS-ECMI study calls for a long-term vision for the future of the European clearing market, by taking financial stability, efficiency, and market development objectives into account.

In the short-term, the best way forward to address EU concerns about the exposure of EU firms to UK central counterparty clearing houses (CCPs) is to implement appropriate supervisory and regulatory co-operation.
A policy to further develop central clearing in the EU should be part of a clear long-term strategy in the context of the Capital Markets Union (CMU), be market-driven and, again, be given the appropriate time to mature.
The alternative, to abruptly restrict EU firms’ access to London, cannot be easily achieved and would result in clear collateral damage for EU banks and end users, put EU banks at a clear competitive disadvantage vis-à-vis it’s international counterparts and unnecessarily harm the EU economy.

Recent Publications

EU’s proposed crypto regulations are flawed

Published in:

Commentaries

20.05.2022

As the crypto world goes through yet another bout of turmoil, it is clear that stronger regulatory oversight is needed of digital assets.

International standards for sustainability: fighting an uphill battle?

Published in:

Event Reports

22.03.2022

Notwithstanding the benefits, the fragmentation and multiplicity of corporate (sustainability) reporting frameworks have also increased costs for companies, investors and regulat

From NGEU to a Green Capital Markets Union

Published in:

Policy Briefs

08.03.2022

Now that the EU’s post-pandemic recovery programme is on course, the priority should be to increase private sector investments.

Shortening the settlement cycle: Why Europe should not wait too long to introduce T+1

Published in:

Commentaries

26.01.2022

The amount of time required for the settlement of securities is a long-running issue for European capital markets.

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Recent Events

In conversation with Verena Ross (ESMA): EU capital market policy update

On 20 April, ECMI will held a virtual roundtable with Verena Ross, Chair of ESMA.

International standards for sustainability: fighting an uphill battle?

Notwithstanding the benefits, the fragmentation and multiplicity of corporate (sustainability) reporting frameworks have also increased the costs for companies, investors and regulators.

Settlement cycle: Should it stay (T+2) or should it go (T+1)?

The settlement cycle refers to the time between the trade date, when an order is executed in the market, and the settlement date. In the EU the settlement cycle since 2014 is set at trade date plus two business days (T+2), while in the US the settlement cycle was shortened from three to two business days in 2017. In the US, there is now an industry-lead initiative to accelerate the securities settlement cycle to one day (T+1).

Will central banks succeed in the digital currencies market?

Most central banks in advanced economies consider issuing central bank digital currencies (CBDCs), not only to address the declining use of cash, but also to position themselves against increased competition from Big Tech companies, cryptocurrencies, and stablecoins.

More Events

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