Brexit – CCP Location and Legal Uncertainty


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The UK’s withdrawal from the European Union (EU), set for March 2019, is now little more than 18 months away. Negotiations between the UK government and the European Commission (EC) on an exit deal are still in their early stages, and there is a very long list of details to be squared away, covering a whole range of legal and economic areas.

The shape of any final Brexit deal will have far-reaching consequences for ISDA’s members and the broader derivatives market. This is the opening whitepaper in a series that will examine Brexit-related issues, and highlight the need for a smooth transition.

One of the highest-profile issues for the financial sector post-Brexit is central counterparty (CCP) location. The vast majority of EU clearing currently takes place in London, but there are suggestions that EU regulators might introduce a location policy for euro-denominated swaps to be cleared in the EU.

The EC published proposed regulation for CCP supervision on June 13, 2017. Ahead of that proposal, ISDA highlighted the issues associated with a possible location policy in a letter to EC vice-president Valdis Dombrovskis. This paper outlines the analysis contained in that letter. ISDA and its members are working through the EC’s proposed rules on CCP supervision, and will summarize the results of this analysis in a future whitepaper.

Another important issue is the need to secure legal certainty for derivatives trading between UK and EU counterparties after March 2019. ISDA urges both the UK and EU to agree on post-Brexit transitional provisions for contracts under English law to reduce complexity and costs for all market participants.

Click on the PDF link below to read a full version of this paper.


Documents (1) for Brexit – CCP Location and Legal Uncertainty