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MLex Market Insight

European Commission’s Low - Key Market - Infrastructure Revamp May Yet Find Its Swagger

MLex Market Insight

MLex Market Insight

News

4.99 Ratings

🗓️ 9 December 2022

⏱️ 14 minutes

🧾️ Download transcript

Summary

This week’s European Commission post-Brexit proposal to repatriate the EU’s clearing activity from the City of London’s three major clearinghouses was, as expected, a moderate affair. With an energy crisis underway and financial stability concerns now top of mind, the EU executive’s proposal was a remarkably conciliatory first step. But there’s a catch: it will now be up to EU governments and lawmakers to work out how tough they need the legislation to be.

Transcript

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0:00.0

So this is our proposal on clearing. It's very measured. It addresses the problems identified.

0:17.0

And we're taking action to make sure that over time we will build up in the European

0:22.2

Union a stronger architecture around CCP. And that was a voice of Marade McGuinness, European

0:28.9

Commissioner for Financial Services, Financial Stability and Capital Markets Union, speaking in Brussels

0:34.7

on Wednesday. The significant part of the announcement was, as you heard,

0:39.2

the Commission's plans for what's known as Clearing and CCPs, which stands for central counterparties,

0:45.8

and we'll get into just what all of that means in a few moments here on the MLEX podcast.

0:51.0

I'm James Panicki, it's great to have your company. And let's hear how European

0:55.2

Commission Executive Vice President Valdus Dombrowskis described the EU executive's proposal

1:01.1

for dealing with UK clearing houses in the post-Brexit world. This is why we need to reduce

1:07.0

our excessive exposure to non-EU clearing houses because it poses significant risks to our

1:13.2

market stability. We also want to incentivise more clearing activity in the EU itself to the

1:20.2

extent needed to safeguard financial stability. So we're getting deep into the weeds of financial

1:25.8

services this week to talk about the process

1:28.0

known as clearing. The European Commission has put forward a raft of measures which include

1:33.3

its vision on how best to tackle the question of reducing the bloc's dependency on UK clearing

1:39.5

houses. Now regular listeners will know only too well that this is just the start of the EU's legislative process.

1:47.0

Nonetheless, the ideas put forward by the Commission give us a sense of what will be on the table of EU lawmakers and national officials when the time comes.

1:56.7

Fiona Maxwell is Emlex's chief correspondent for financial services and she joins me now from London

2:02.1

and from Brussels we're speaking to our EU financial services correspondent Catherine Carlson.

2:08.6

Fiona, just to help us walk through this issue here, what is clearing and why is this so important

2:15.9

in the UK-EU post-Brexit environment?

...

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