03 November 2009 News

 

LCH.Clearnet and EMCF interoperability on hold as regulators examine proposals

Interoperability projects between central counterparties have reportedly been put on hold, as regulators have failed to give their approval for the current agreements. A spokesperson for the UK's Financial Services Authority confirmed that: "We are working with other regulatory agencies in the Netherlands and Sweden examining the robustness of proposals concerning interoperability of central counterparties. That work is ongoing."

LCH.Clearnet said in a statement to its members on Monday that it has "received notification from the FSA that it is closely engaged with the Swiss and Dutch Authorities whereby they are reviewing the interoperability arrangements between the CCPs. The FSA has advised that its regulatory review of the interoperability arrangements is expected to be completed within three months. LCH.Clearnet Ltd will continue to work with the regulators to expedite their review process."

Banking Technology understands that concerns about inter-CCP margins have led to regulators questioning the risk management benefits of the current model. The Netherlands' Authority for the Financial Markets was not willing to comment on specific cases.

Inter-CCP operability is intended to offer greater choice of clearing, reducing costs and increasing security. LCH.Clearnet and EMCF had expected to announce they would begin to inter-operate together in November.