CCP supervision after Brexit: from extraterritoriality to a model of shared control

Brexit has triggered a battle over the clearing of derivatives between the UK and the European Union. While the former seeks to maintain its preeminent market position, the latter seeks to curtail it in the name of ‘financial stability’.

This contribution submits the economic and legal arguments made in this cross-Channel debate to close scrutiny. It also discusses in depth the most recent changes to the EU’s legal framework (EMIR 2.2), which has been mirrored by similar provisions in the UK. These provisions aim at giving supervisory authorities extraterritorial (control) over systemically relevant clearing services; and in case this is impossible or insufficient, provide for the onshoring of these services.

The contribution concludes that we are witnessing the emergence of a new type of supervision for globally significant financial market infrastructures, which is called here ‘shared control’.