Central Counterparties (CCP) and the New Transnational Lex Mercatoria

Abstract

This article argues that the new transnational lex mercatoria is the main source of law governing the operations of Central Counterparty (CCP) clearing systems. It demonstrates that the new transnational lex mercatoria has been recognized by the courts in various common law jurisdictions as the appropriate source of law governing the operations of various other commercial and financial institutions. It is argued that this new legal regime requires official recognition by the courts in order to protect CCP arrangements from burdensome corporate insolvency laws; especially for the protection of non-financial market CCPs, which are currently not protected by special legislation like their counterparts operating in the financial markets. Therefore, this new legal regime can step in to protect CCP operations where specific legislation has not done so. Furthermore, it is argued that the new legislative reforms of financial market CCPs in the U.S. and the E.U. will have little impact on the new transnational lex mercatoria as an independent legal regime.

Keywords: CCP systems, the new transnational lex mercatoria, insolvency law, carve-out statutes, bank for international settlements