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EU CCP Capital “zombieline” staggers on

The EC has announced its adoption of an implementing act to extend the transitional period for the application of the CRR to CCPs by a further six months. The Capital Requirements Regulation mandates levels of capital that must be held by EU banking groups against their exposure to central counterparties. The EC had already extended the deadline to 15 June 2015, the new date by which CCPs must be qualified or recognised- failure to do so renders the CCP ineligible to benefit from fractional capital requirements, increasing capital requirements 25-30 times. The new deadline expires 15 December 2015.


Jonathan Hill said “”The decision will give the market the legal certainty it needs for the next six months“. It is difficult to see six months of legal “certainty” as anything but wholly provisional; however in the absence of transatlantic concord, the EC had no choice but to commission another series of this long-running soap-opera. Meantime we may expect liquidity to continue fragmenting along geographical fault-zones.

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