PARIS (MNI) – The European Central Bank said Friday it was seeking to change a legal statute to give it “clear legal competence” to supervise and regulate euro-denominated clearing operations.
The ECB said the Governing Council had recommended that Article 22 its operating statute be changed to give it the power to “make regulations, to ensure efficient and sound clearing and payment systems, and clearing systems for financial instruments, within the Union and with other countries.”
Euro-clearing operations based in London have become a major point of contention in the run-up to the UK exit from the European Union. Ninety percent of euro-denominated interest rate swaps of euro area banks and 40% of their euro-denominated credit default swaps are cleared in London, ECB Executive Board member Benoit Coeure said Tuesday.
The ECB said its new powers would give euro-area central banks “a significantly enhanced role” in supervising so-called CCPs, including “systemically important third-country CCPs” that clear significant amounts of euro transactions.
The European Commission has proposed that large systemically important euro clearing operations should ultimately be relocated inside the EU, a proposal that has been endorsed by Coeure and other euro central bankers.
The governor of the Bank of France, Francois Villeroy de Galhau, said Thursday that “a location policy is the only viable mechanism to guarantee that European authorities, and the Eurosystem in particular, can control and manage the risks that CCPs are likely to pose to the financial stability of the European Union.
On Friday, European Commission President Jean Claude Juncker said EU authorities should certainly listen to ECB President Mario Draghi on clearing issues.
By Jack Duffy
FRIDAY, JUNE 23, 2017 – 03:56