European lawmakers urged to prevent CCP contagion risk
Watchdog says carve-out needed in new recovery and resolution rules to avoid cascading default of clearing houses
Rules to resolve ailing central counterparties must change to ensure tools used by a CCP to allocate losses don’t force another over the cliff, Europe’s watchdog for systemic risk has warned.
“Having legal certainty in dealing with interoperable CCPs is crucial,” says Giuseppe Insalaco, a principal financial stability expert at the European Systemic Risk Board. “Resolution authorities [must be
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