In CCP We Trust ... Or Do We? Assessing the Regulation of Central Clearing Counterparties in Europe

in Capital Markets Law Journal (2019), 14(3),

As part of financial market infrastructures, central counterparties (CCPs) have long been deemed systemically important and are likely to gain in importance due to the regulatory developments mandating ... [more ▼]

As part of financial market infrastructures, central counterparties (CCPs) have long been deemed systemically important and are likely to gain in importance due to the regulatory developments mandating central clearing for an increasing number of financial products. This paper focuses on the regulation as well as the recovery and resolution of CCPs in Europe. The existing CCP regulatory framework consists of ex-ante measures, including, among others, capital and liquidity requirements, initial and variation margins, and loss sharing mechanisms. In addition, the European proposal for the recovery and resolution of CCPs (the Proposal) contains several ex-post regulatory measures mainly in the form of rules for recovery and orderly resolution. Having studied the prudential regulatory measures for CCPs contained in the European Market Infrastructure Regulation and the ex-post recovery and resolution measures of the Proposal, this paper puts a spotlight on the specific shortcomings of the existing and proposed rules, in particular in terms of misaligned incentives, externalities, collective action problems, and certain practical impediments, and concludes that it would be misguided to inordinately rely on ex-post measures. Highlighting the limitations of the recovery and resolution mechanisms, this paper proposes that given the systemic importance of CCP functions, it is critical to improve the ex-ante measures whose objective is to prevent the failure of a CCP, rather than ex-post measures, which kick in after its failure. Accordingly, recommendations for making such improvements are proposed. [less ▲]

Making Deposit-Funded Credit Institutions Banks Resolvable

Presentation (2019, May 10)

Preparing for Doomsday: Financial Services after a No-Deal Brexit

in DCU Brexit Institute Blog (2019)

Assessing the post-crisis European Economic Constitution: the fiscal perspective

in Hofmann, Herwig; Pantazatou, Aikaterini; Zaccaroni, Giovanni (Eds.) The Metamorphosis of the European Economic Constitution (2019)

Conventional and Unconventional Monetary Policy

in Fabbrini, Federico; Ventoruzzo, Marco (Eds.) Research Handbook on European Economic Law (2019)

Bending and Breaking Europe's Single Resolution Mechanism: the case of Italy

in Journal of Common Market Studies (2019)

This paper examines the political economy and law of bank resolution in the case of Italy—specifically its treatment of three failing banks that were resolved in 2016/2017—Monte de Paschi, Veneto and ... [more ▼]

This paper examines the political economy and law of bank resolution in the case of Italy—specifically its treatment of three failing banks that were resolved in 2016/2017—Monte de Paschi, Veneto and Vicenza banks. These three cases stand out for the relatively large degree of discretion exercised by national resolution and state aid authorities, ultimately with the permission of their European counterparts. This paper examines the motivations driving Italian authorities to lobby the Commission for leeway in applying the Bank Recovery and Resolution Directive, and analyses the intricacies of the legal framework to underline the extent of discretion exercised by policy makers. It concludes that the discretion visible in these three cases is not (entirely) contained within EU law, and that bending the law or turning a blind eye to infractions was key to understanding the EU approach to Italy. [less ▲]

Bail-in and Retail Investors; where regulatory and political disequilibria meet

Presentation (2018, April 12)

International law as a Negotiation tool in Banking Union; the case of the Single Resolution Fund

in Journal of Economic Policy Reform (2018)

EU’s response to the recent Euro-crisis has involved a mixture of EU and international law, with the latter being linked to all the arrangements that may have fiscal implications for national Member ... [more ▼]

EU’s response to the recent Euro-crisis has involved a mixture of EU and international law, with the latter being linked to all the arrangements that may have fiscal implications for national Member States. The SRF embodies all the controversial characteristics of Banking Union. This article illustrates the legal implications that this political choice creates, and how the interrelation between the SRM, the SRF and the ESM, allows leading economies, including Germany, to control the resolution framework both before and after crisis. This raises questions as to the direction that European Integration is taking and its highly nationalised character. [less ▲]