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I Introduction to OTC Derivatives Clearing in Europe, 1 After the Dust Has Settled: Clearing OTC Derivatives in Europe after a Decade of Regulation

Bas Zebregs, Victor de Serière, Patrick Pearson, Rezah Stegeman

From: Clearing OTC Derivatives in Europe

Edited By: Bas Zebregs, Victor de Seriere, Rezah Stegeman, Patrick Pearson

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 14 April 2024

Subject(s):
Interest and credit — Derivatives — Equity — Central counterparty (CCP) — Trade repository — Currency — Exchange control — European Securities and Markets Authority (ESMA)

This chapter provides an overview of over-the-counter (OTC) derivatives clearing in Europe. As a consequence of the way in which central counterparties (CCPs) responded to the bankruptcy of Lehman Brothers in 2008 and enabled financial markets to continue to operate during the financial crisis, legislators and regulators immediately and unanimously concluded that (i) OTC derivatives clearing not only reduces systemic risk and enhances financial stability but also (ii) CCPs themselves are systemically important institutions that can potentially raise issues of systemic risk. In 2012, EMIR was adopted, introducing mandatory clearing of designated OTC derivatives, regulatory requirements for CCPs, stricter rules for uncleared OTC derivatives, and a reporting obligation for derivatives to central trade repositories. The chapter then considers the effects of Brexit and presents some relevant market data to illustrate the scope and scale of the OTC derivatives clearing markets in Europe. It also outlines the various chapters in the book.

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