The UK is proposing legislative solvency changes to protect central counterparties from risk transfer should a member default
LONDON – The UK Treasury has published a consultation paper of proposed reforms to Part 7 of the 1989 Companies Act, modifying general solvency law to protect central counterparties – such as clearing houses and exchanges.
The paper, Modernising the insolvency protections for the operation of financial markets – proposals to reform Part 7 of the 1989 Companies Act seeks to protect clearing houses and exchanges from risk transfer, should one of their members default.
Current legislation does not recognise the commonly used ‘default funds’ used by clearing houses to offset losses of a defaulting member or the range of contracts now cleared by central counterparties.
The proposals would expand the definition of market contracts, make allowances for default funds, and address technical issues arising from ‘client accounts’ across national jurisdictions. The Treasury has set an October 16 deadline for responses.
More on Risk Management
Banks could be "unbundled" if they reject technology overhaul
ABSTRACT In this paper, we discuss investment allocation to multiple alpha streams that are traded on the same execution platform. This includes when trades are crossed internally, resulting in turnover...
Welcome to The Journal of Investment Strategies' Online First Forum. Here you will find the latest peer reviewed, accepted papers before they are available in print. With Online First publication,...
French bank, JP Morgan and Nomura have all lost senior clearing execs in past month
Sign up for Risk.net email alerts
Sponsored video: Elseware
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.