Financial stability: ALDE strengthens new EU rules for the recovery and resolution of central counterparties (CCPs) in European Parliament vote.
The European Parliament’s Economic and Monetary Affairs Committee has today overwhelmingly adopted new EU rules, which will put in place a recovery and resolution framework for Central Counterparties (CCPs), in the event of a CCP failure.
In the wake of the financial crisis of 2007–08, G20 leaders agreed at the 2009 Pittsburgh Summit that all standardised over-the-counter derivatives contracts should be traded on exchanges or electronic trading platforms and cleared through central counterparties (CCPs). Since then the importance of CCPs has nearly doubled. A large proportion of the EUR 500 trillion of derivatives contracts that are outstanding globally are cleared by 17 CCPs across Europe.
After the vote this afternoon in the Economic and Monetary Affairs Committee, Caroline Nagtegaal MEP, shadow rappoorteur for the ALDE Group, said:
“The proposals adopted today seek to strengthen the European Union’s financial system and to safeguard taxpayers in the unlikely event that CCPs, which many companies use to manage their risk, fall into difficulty. “
“This is an important element in our ongoing battle to strengthen the financial system after the 2007-08 financial crisis and ensure that in the event of a CCP failure, there are rules in place to deal with this and maintain confidence in the financial system.”
The ALDE Group in the European Parliament tabled a number of amendments to strengthen the Commission’s proposed text. Caroline Nagtegaal MEP explains;
“Liberals and Democrats pushed to ensure that cyber threats are properly taken into account in this legislation, while making sure that public money should only be used as a last resort. In the event that public money is used to stabilise the market in the event of a failing CCP, we have put in place a mechanism to ensure we get it back.”