UK Financial Policy Committee says UK banks okay with Brexit but CCPs in jeopardy

  • The FPC continues to judge that the 2017 stress test encompassed an appropriately wide range of UK macroeconomic outcomes that could be associated with Brexit.  As it has set out previously, the FPC judges that Brexit risks, including those of a disorderly, cliff-edge Brexit in which there was no agreement or implementation period, do not warrant additional capital buffers for banks.
  • Timely action by EU authorities is needed to mitigate risks to financial stability, particularly those associated with derivative contracts and the transfer of personal data.
  • Absent action by EU authorities, EU rules create legal uncertainty about whether EU clearing members could continue to meet their ongoing obligations to UK CCPs and about the consequences for UK CCPs of continuing to provide services to the EU.  To ensure the safe operation of CCPs and avoid financial stability risks, particularly in a stress, the contracts EU clearing members have with UK CCPs will need to be closed out, or transferred, before March 2019.  This will be costly to EU businesses and could strain capacity in the derivatives market.

Related Posts

Previous Post
SIX licenses SARON to Eurex for futures contracts
Next Post
FT: ECB warns banks to curtail booking trades and loans in UK after Brexit

Related Posts

Fill out this field
Fill out this field
Please enter a valid email address.

Menu
X

Reset password

Create an account