Central Counterparties’ Insolvency and Resolution – The New EU Regulation on CCP Recovery and Resolution

Abstract

With its new Regulation on the Recovery and Resolution of Central Counterparties, European Capital Markets Law has filled an important void in the regulatory framework for the operation of central counterparties, which has been established with the EU Markets Infrastructures Regulation (EMIR) as early as 2012. With a comprehensive set of preventive and reactive provisions for the restructuring of central counterparties, the new instrument clearly takes a bold step. The provisions build on existing international standards, but are far more granular than these. The present paper assesses the underlying policy and the technical content of the Regulation in the light of the post-financial crisis literature on the systemic relevance of financial market infrastructures.

Keywords: Central Counterparties, EMIR, Recovery and Resolution, Systemic Relevance, Derivatives Clearing and Settlement

JEL Classification: G01, G15, G23, G28, G33, K28