Brexit and CCP Supervision: From Extraterritoriality to a Model of Shared Control

Abstract

Brexit has triggered a battle over the clearing of derivatives between the United Kingdom and the European Union. While the former seeks to maintain its preeminent market position, the latter seeks to curtail it in the name of "financial stability". This contribution submits the economic and legal arguments made in this cross-Channel debate to close scrutiny. It also discusses in depth the most recent changes to the EU's legal framework (EMIR 2.2), which has the double aim to take control of clearing operations in Britain and repatriate the most important of them to the EU. The contribution concludes that we are witnessing the emergence of a new type of supervision for globally significant financial market infrastructures, which is called here "shared control".

JEL Classification: F59, F65, K22, K23, K33