About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

EBF Highlights Concerns About CCPs and Systemic Risk in its Feedback to Commission’s Market Infrastructure Reforms

Subscribe to our newsletter

There has been a lot of discussion about the pros and cons of mandating clearing for OTC derivatives and the comments received so far by the European Commission on the subject have tended to focus on a proportional, rather than broad brush, approach to the reforms. The European Banking Federation’s (EBF) response, for example, has been to call for a step by step approach to adding the various classes of derivatives to central counterparties (CCPs) in order to bring down counterparty risk without increasing systemic risk overall.

These recommendations to avoid a one size fits all approach to CCP clearing for OTC products is not a new one, as many in the industry have raised similar issues. The fear is that by forcing non-liquid instruments to be cleared, the potential for a CCP to default and thus systemic risk exposure will be increased. Hence the EBF indicates that there is “no single model approach” to this space and that the regulatory community should be engaged in “structured and regular dialogue” with the industry before action is taken. It also adds that a CCP’s risk committee should be heavily involved in the decision making process.

The EBF is also concerned that competition in the CCP market may prove detrimental to the operation of these bodies if it is not monitored carefully. This task of oversight should therefore be the remit of the CCP’s risk committees and regulators. “EBF believes that competition between CCPs should not be at the expense of proper risk management. Being risk takers by definition, CCPs should be single purpose entities which concentrate on their core business and must therefore have capital capable of preserving their stability,” it notes in its response.

It also notes that “unfettered access” to the data held by CCPs should be provided to regulators charged with monitoring their activities. Yet more data for the regulatory community to do something useful with.

The banking sector association is not nearly as prescriptive when it comes to the establishment of trade repositories, however. It notes that the decision to establish these infrastructures should be “market led” but does not prescribe how they should operate. Although it does note that reporting requirements to these repositories should not existing transaction reporting requirements, as determined by the Committee of European Securities Regulators (CESR) under MiFID. “Formats for reporting information to trade repositories should be subject to market driven, regulatory promoted standardisation,” it adds. Yet more ammunition for a regulatory data utility.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Reviewing the Latency Landscape and the Next Generation of Ultra-Low Latency Infrastructure

Date: 17 September 2026 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Ultra-low latency is no longer the preserve of a handful of proprietary trading firms. As new asset classes electronify, data volumes surge, and regulatory expectations around execution quality and resilience tighten, the performance demands on trading infrastructure are broadening...

BLOG

Quantum Readiness in Trading: Why Cryptography and Data Governance Matter More Than Qubits

Quantum computing is becoming one of the most widely discussed emerging technologies in financial markets infrastructure. In industry commentary, the technology is often framed either as a revolutionary engine for trading performance or as an existential threat to the cryptographic systems that secure global finance. In practice however, the near-term impact is likely to be...

EVENT

Eagle Alpha Alternative Data Conference, London, hosted by A-Team Group

Now in its 8th year, the Eagle Alpha Alternative Data Conference managed by A-Team Group, is the premier content forum and networking event for investment firms and hedge funds.

GUIDE

Pricing and Valuations

This special report accompanies a webinar we held a webinar on the popular topic of Pricing and Valuations, discussing issues such as transparency of pricing and how to ensure data quality. You can register here to get immediate access to the Special Report.