The Law and Regulation of Central Counterparties

Author: Jiabin Huang
Publisher: Bloomsbury Publishing
ISBN: 9781847316097
Release Date: 2010-10-20
Genre: Law

The Law and Regulation of Central Counterparties provides a detailed analysis of the legal and regulatory aspects of Central Counterparties (CCPs) with an introduction to their role and functions in modern financial markets. The book begins by describing in detail basic elements of modern post-trade infrastructure, exploring the modern functional and operational aspects of CCPs in the markets. It moves on to discuss the relationships between CCPs and their members, and clients of clearing members as non-members, legal issues concerning collateralisation, netting and set-off, and default arrangements that are primarily embedded in the form of the rules and regulations of CCPs. With regard to regulatory issues, the book examines the regulatory framework with reference to the UK and the EU. As to the case for a single CCP for various different types of markets, the analysis covers the advantages and disadvantages of CCP clearing and carries out an assessment of the risks and benefits of a single multi-market CCP.

Central Counterparties Addressing their Too Important to Fail Nature

Author: Froukelien Wendt
Publisher: International Monetary Fund
ISBN: 9781498353984
Release Date: 2015-01-27
Genre: Business & Economics

Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.

Central Counterparties

Author: Jon Gregory
Publisher: John Wiley & Sons
ISBN: 9781118891582
Release Date: 2014-06-25
Genre: Business & Economics

Practical guidance toward handling the latest changes to the OTC derivatives market Central Counterparties is a practical guide to central clearing and bilateral margin requirements, from one of the industry's most influential credit practitioners. With up-to-date information on the latest regulations imposed after the global financial crisis, this book covers the mechanics of the clearing process and analyses the resulting consequences. Detailed discussion explains the ways in which the very significant clearing and margining rules will affect the OTC derivatives market and the financial markets in general, with practical guidance toward implementation and how to handle the potential consequences. Over-the-counter derivatives were blamed by many for playing a major role in the 2007 financial crisis, resulting in a significant attention and dramatic action by policymakers, politicians, and regulators to reduce counterparty credit risk which was seen as a major issue in the crisis. The two most important regulatory changes are the mandatory clearing of standardised OTC derivatives, and the requirements for bilateral margin posting in non-standard OTC contracts. Central Counterparties is a complete reference guide to navigating these changes, providing clarification and practical advice. Review the mitigation of counterparty credit risk with the historical development of central clearing Clarify the latest regulatory requirements imposed by Dodd-Frank, EMIR, Basel III and more Learn the mechanics of central clearing, with special attention to complex issues such as margin calculations, the loss waterfall, client clearing and regulatory capital rules Gain insight into the advantages and disadvantages of clearing and bilateral margin requirements, and the potential issues that arise As the clearing and margining mandates are phased in, the associated costs will be severe enough to dramatically shift the topology of the financial markets and transform the nature of risk. Central Counterparties provides the information, clarification and expert insight market practitioners need to get up to speed quickly.

Research Handbook on International Financial Regulation

Author: Kern Alexander
Publisher: Edward Elgar Publishing
ISBN: 9780857930453
Release Date: 2012
Genre: Law

The globalisation of financial markets has attracted much academic and policymaking commentary in recent years, especially with the growing number of banking and financial crises and the current credit crisis that has threatened the stability of the global financial system. This major new Research Handbook sets out to address some of the fundamental issues in financial regulation from a comparative and international perspective and to identify some of the main research themes and approaches that combine economic, legal and institutional analysis of financial markets. Specially commissioned contributions represent diverse viewpoints on the financial regulation debate and cover a number of new and controversial topics not yet adequately addressed in the literature. Specifically, these include; financial innovation particularly in the context of the credit risk transfer market, securitization and the systemic importance of the over-the-counter trading markets; the institutional structure of international financial regulation; and risk management and corporate governance of financial institutions. This Handbook will provide a unique and fully up-to-date resource for all those with an interest in this critical issue including academic researchers in finance and regulation, practitioners working in the industry and those involved with regulation and policy.

Europ isches Kollisionsrecht des Effektengiros

Author: Michael Born
Publisher: Mohr Siebeck
ISBN: 3161522370
Release Date: 2014-07-29
Genre: Law

English Summary: The law applicable to securities held in book-entry form in securities accounts is subject to a variety of European private international law rules. However, these provisions have not yet established a complete and consistent conflict of laws regime. Michael Born analyses the inconsistencies and gaps and also examines the options for eliminating the identified shortcomings. German Description: Wertpapiertransaktionen auf den Kapitalmarkten werden nur noch durch Umbuchungen in einem System von Depotkonten erfullt. Die stuckelose Transaktionsform, der Effektengiroverkehr, steht zwangslaufig in einem Spannungsverhaltnis zu traditionellen wertpapierrechtlichen Konzepten. Angesichts des ubiquitaren Charakters der Finanzmarkte lasst sich dabei gerade auch kollisionsrechtlich ein starkes Bedurfnis nach Rechtssicherheit ausmachen. Um diesem zu entsprechen, stehen die intermediatisierten Titel seit langerem auf der Agenda des europaischen Gesetzgebers. Als Querschnittsmaterie des Internationalen Sachen-, Schuld- und Insolvenzrechts hat sich ein europaisches Kollisionsrecht des Effektengiroverkehrs herausgebildet. Michael Born analysiert die verschiedenen Sekundarrechtsakte, zeigt Parallelen und gemeinsame Grundzuge auf und legt die bestehenden Defizite und Lucken dar. Weiter lotet er die Optionen fur eine kunftige heteronome oder autonome Fortentwicklung des europaischen Rechtsrahmens aus.

European Union

Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 9781475562064
Release Date: 2013-03-15
Genre: Business & Economics

The analysis focuses on the effectiveness of the regulatory, supervisory, and oversight frameworks for central counterparties (CCPs) and central securities depositories (CSDs) in the European Union (EU) as these are essential for financial stability. Cooperation between authorities within and outside the EU is critical to reduce the risks related to the cross-border nature of clearing and settlement within the EU. In this context, crisis management arrangements among EU authorities are of key importance to adequately fulfill the various responsibilities that authorities may have in relation to CCPs and CSDs in crisis situations.

Limiting Taxpayer Puts An Example from Central Counterparties

Author: Mr. Manmohan Singh
Publisher: International Monetary Fund
ISBN: 9781498385381
Release Date: 2014-11-12
Genre: Business & Economics

Nonbanks such as central counterparties (CCPs) are a useful lens to see how regulators view the role of the lender-of-last-resort (LOLR). This paper explores the avenues available when a nonbank failure is likely, specifically by considering the options of keeping CCPs afloat. It is argued that CCPs have, by regulatory fiat, become “too important to fail,” and thus the imperative should be greater loss-sharing by all participants that better align the distribution of risks and rewards of CCPs, the clearing members and derivative end-users. In the context of LOLR, the proposed variation margin gains haircut (VMGH) is discussed as a way of limiting the taxpayer put.

Capital Requirements for Over the Counter Derivatives Central Counterparties

Author: Ms. Li Lin
Publisher: International Monetary Fund
ISBN: 9781475571776
Release Date: 2013-01-08
Genre: Business & Economics

The central counterparties dominating the market for the clearing of over-the-counter interest rate and credit derivatives are globally systemic. Employing methodologies similar to the calculation of banks’ capital requirements against trading book exposures, this paper assesses the sensitivity of central counterparties’ required risk buffers, or capital requirements, to a range of model inputs. We find them to be highly sensitive to whether key model parameters are calibrated on a point-in-time versus stress-period basis, whether the risk tolerance metric adequately captures tail events, and the ability—or lack thereof—to define exposures on the basis of netting sets spanning multiple risk factors. Our results suggest that there are considerable benefits from having prudential authorities adopt a more prescriptive approach to for central counterparties’ risk buffers, in line with recent enhancements to the capital regime for banks.

The Consequences of the Global Financial Crisis

Author: Wyn Grant
Publisher: Oxford University Press
ISBN: 9780199641987
Release Date: 2012-05-24
Genre: Business & Economics

Systematically exploring the consequences of the global financial crisis, this text focuses primarily on the impact on policy and politics. It asks how governments responded to the challenges that the crisis has posed, and the policy and political impact of the combination of both the crisis itself and these responses.

Mexico Financial System Stability Assessment Update including Summary Assessments on the Observance of Financial Sector Standards and Codes on the following topics The Basel Core Principles for Effective Banking Supervision and the IOSCO Objectives a

Author: International Monetary International Monetary Fund
Publisher: International Monetary Fund
ISBN:
Release Date: 2006-10-11
Genre:

1. Mexico has been hard hit by the global crisis, essentially for reasons outside the authorities' control. Financial conditions tightened sharply following the failure of Lehman Brothers last September. At the height of the turmoil, some Mexican corporates incurred large losses on foreign currency derivatives transactions, which put substantial pressure on the exchange rate and credit spreads. As the U.S. downturn intensified-especially the collapse of industrial production which has large spillovers to Mexico-real activity weakened very sharply. Combined with still heightened financial market strains, concerns arose earlier this year over tail risks of a downward spiral as discussed in IMF Country Report No. 09/126.

Germany

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 9781463975593
Release Date: 2011-09-02
Genre: Business & Economics

Eurex has a sound, transparent, and enforceable legal basis to address the legal risks related to its activities. Eurex is regulated and supervised as a bank. Its clearing activities are governed by a consistent and solid set of laws, regulations, rules, and instructions. Eurex has a comprehensive risk management framework composed of objectives, measures, and tools defined at the level of Eurex and that of the Deutsche Börse Group (DGB). Eurex regularly reviews its pricing, service, and capacity level, and is regulated and supervised by several authorities.

Clearing and Settlement

Author: Dermot Turing
Publisher: Bloomsbury Publishing
ISBN: 9781784510695
Release Date: 2016-10-13
Genre:

This second edition comprehensively explains, both in theory and practice, the complexities of the law and regulation surrounding the processes of clearing and settlement. Contents include: clearing and settlement and the roles of (and risks assumed by) the various participants in the post-trade marketplace; how the law is applicable to infrastructures, how they are regulated, and the other topographical features of their legal landscape; the legal and practical aspects of risk management and operations of infrastructures; and the risks faced by participants in payment, clearing and settlement systems-the agent banks-along with practical and operational issues which they face in their roles. In addition to the coverage of the legislature, commonly encountered practical problems are discussed, including 'client clearing, ' regulatory capital, and protective insolvency legislation. Risk and legal issues arising in clearing and settlement operations (liquidity, outsourcing, corporate actions, and securities lending) are also covered. The following new topics are included in the second edition: the clearing obligation in practice, especially as regards transactions involving non-EU parties; indirect clearing; and recovery and resolution of CCPs (central counterparties). [Subject: Financial Law, Commercial Law, Banking Law

France

Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 9781484317464
Release Date: 2013-07-01
Genre: Business & Economics

This paper discusses key findings of the Detailed Assessment of LCH.Clearnet SA Observance of the Committee on Payment and Settlement Systems/International Organization of Securities Commission (CPSS–IOSCO) Recommendations for Central Counterparties. The findings reveal that LCH.Clearnet SA displays a high level of observance of the CPSS/IOSCO recommendations. It has a sound, coherent, and transparent legal basis. It has developed an adequate risk-management framework to address financial and operational risks. LCH.Clearnet SA governance arrangements and composition of Boards and management are well defined and adequately staffed.

Annotated Guide to the Insolvency Legislation Company Directors Disqualification Act 1986 EU Regulation on Insolvency Proceedings 2000 UNCITRAL model law on cross border insolvency Cross Border Insolvency Regulations 2006 Selected statutes and statutory instruments

Author: L. S. Sealy
Publisher: Sweet & Maxwell
ISBN: 9780414047846
Release Date: 2011
Genre: Bankruptcy

This long-established legislation handbook provides annotated commentary and clarification on the legal and practical implications of the latest insolvency legislation. It is the standard work for accountants, lawyers and government officers dealing with insolvency.