The Eurosystem's policy line with regard to consolidation in central counterparty clearing

27 September 2001

Frankfurt am Main, 27 September 2001

The recent developments in the field of central counterparty clearing in Europe have prompted the Governing Council of the ECB to assess their implications for the smooth execution of monetary policy operations, the smooth operation of payment and settlement systems and the stability of the financial markets in general.

In this regard, the Governing Council has come to the following conclusions:

  1. Owing to the potential systemic importance of securities clearing and settlement systems, the Eurosystem has an interest in central counterparty clearing and considers that it is essential to establish, in co-operation with the other relevant authorities, effective risk management standards.
  2. The natural geographical scope for any "domestic" market infrastructure (including central counterparty clearing) for securities and derivatives denominated in euro is the euro area. Given the potential systemic importance of securities clearing and settlement systems, this infrastructure should be located within the euro area.
  3. The process of consolidation of central counterparty clearing infrastructure should be driven by the private sector, unless there are clear signs of market failures.
  4. Whatever the final architecture, it is essential that access to facilities for trading, clearing and settlement should not be unfairly impeded. This policy of open and fair access should ensure the safety, legal soundness and efficiency of securities clearing and settlement systems, guarantee a level playing-field, and avoid excessive fragmentation of market liquidity.
  5. The Eurosystem supports co-operation between providers of central counterparty clearing services at a global level and should be involved in monitoring global multi-currency systems handling euro as part of its interest in ensuring their smooth operation.

Moreover, for reasons of transparency, the Governing Council has decided to provide a comprehensive note on this issue (pdf 30 kB), which is available on the ECB's website.

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