LSEG Response to DG Internal Market and Services working document on Technical Details of a Possible EU Framework for Bank Recovery and Resolution.
The London Stock Exchange Group has responded to some aspects of the working document of DG Internal Market and Services: “Technical Details of a Possible EU Framework for Bank Recovery and Resolution”. Our submission draws on our significant practical experience of large scale bank insolvencies, particularly that of Lehman Brothers International (Europe). In summary:
· Effective prevention is a critical element of an improved regulatory crisis management framework and we support the emphasis placed on prevention and preparation in the Commission’s crisis management Communication and Consultation Paper;
· Effective supervision and enforcement of rules in the financial services sector is vital if regulators are to ensure the successful implementation of new legislation and to deal with the challenges posed by cases in which the recovery or resolution of an institution is necessary;
· We believe there is a case for the increased use of electronic confirmation systems. These provide legal certainty to the parties to a trade and can reduce risk by reducing the incidence of settlement failure and contract dispute;
· We agree with the view of DG Internal Market and Services that it is unnecessary to bring all investment firms within the meaning of MiFID within the scope of a crisis management framework;
· Rapid and full information sharing with the market regulatory authorities, operators of regulated markets, MTFs, and other market infrastructure providers will be critical in maintaining orderly markets and avoiding systemic impact in the clearing and settlement environments;
LSEG response to EC Consultation on Crisis Management(file pdf - 37 KB)