Global not local - Intervention on EMIR location policy

Los Angeles

Thank you Chair, it is good to finally have an opportunity within this Committee to have a full and frank discussion on the issues within this proposal.

It seems that certain areas of this proposal are being played out in the media or through high level political discussions, without much consideration for the details of this subject, or the fundamentals of how and why global Clearing works.

Over the past 7 or 8 years we have seen the strengthening of global CCPs, many with common global clearing members and then a common customer base and all deriving their resilience from an ambitious and effective global model reinforced by agreed standards.

This proposal is, in some ways, a stepping back from that global success, with very little justification as to why.

I too have a problem with a complex supervisory structure as commented by Stephen Majoor yesterday.

To impose regional restrictions on a global currency is the wrong approach and entirely at odds with the aim of securing the future of the currency.

To suggest a location policy - concentrates regional risk, ignores completely the benefits of a global netting system and potentially traps billions of euros worth of capital that realistically the EU based clearing members cannot afford.

Moreover the proposal conflates monetary policy with financial stability.

To allow central banks an opinion over any decision made by the ESMA and the national supervisors, whilst at the same time not provisioning for any mediation mechanism between them, is illogical.

If a central bank disagrees with a supervision decision made by an NCA and ESMA, under this proposal they can decide to put forward Amendments to that decision. This decision can then only be carried out, if these amendments are taken on board.

For what reason would a central bank wish to amend a supervisory decision? For reasons of monetary policy, if they deem this action to effect or distort their aims, they are equipped with an effective veto.

This primacy of Central bank’s monetary policy over financial stability - is illogical at best and dangerous at worst.

The global nature of the participants in the systemically important CCPs, should be borne in mind.

I look forward to future discussion with the negotiating team.