Dr. Mario Nava - Lecture at the LSE on European Financial Regulation and the Financial Crisis
Story date: 2009.3.31
Mario Nava
Mario Nava, the European Commission`s head of financial market infrastructure, told a meeting in London last night that the European Commission is "fine" with the possibility of a clearing house for credit derivatives being based in London. However, he reiterated demands that Europe should set up its own clearer separate from the US to avoid there being a "single point of failure".
Speaking at a lecture at the London School of Economics organised by credit asset manager Cairn Capital, Nava warned that if the industry back-tracks from a commitment made on 19 February to use a European clearer, then the commission would revisit the idea of bringing it about through legislation. This, he said, could be achieved by mandating the use of a European clearing house by institutions based in the European Union or for European reference entities. Or it could take the form of legislation to "encourage" clearing by only allowing cleared trades to count as risk mitigating instruments.
Asked if he was happy for a credit derivatives clearer to be based outside the eurozone - in London, for example, Nava pointed out that the European Union is a multicurrency environment and that "where it will be is fine by us". Though he pointed out that the European Central Bank may take a different view on this. He added that he would not be surprised to see the emergence of more than one clearer within Europe, for example, one in the eurozone and one in the "sterling zone", that is, the UK.
A recent report by the Banque de France called for a European clearing house to be based in the eurozone, and criticised the idea of having a clearer based in London.
Nava also pointed out in the lecture that there is no European drive to see credit derivatives trade on exchange.
Written by Mike Peterson, Creditflux
