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EU Court Annuls European Location Policy for CCPs

Roberta Holland | March 11, 2015

The European Union’s General Court last week annulled the European Central Bank’s framework requiring central counterparties to be located in the Eurozone.

The ECB published its Eurosystem Oversight Policy Framework in July 2011, for its supervision of payment, clearing, and settlement systems according to the Treaty on the Functioning of the EU (FEU Treaty). The policy referred to risks that infrastructures located outside the euro area could pose to payment systems within the Eurozone, and concluded that infrastructures settling euro-denominated transactions should be based within the euro area. The ECB said that location policy applied to central counterparties (CCPs) with an average daily net credit exposure of more than €5 billion in one of the major euro-denominated categories.

The United Kingdom challenged the policy in September 2011, arguing the bank supervisor did not have the authority to implement a location requirement for CCPs. The U.K. also argued it...

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