December 2012

LSEG response to EC’s consultation on recovery and resolution frameworks for financial institutions other than banks

The London Stock Exchange Group has provided a response to the EC’s consultation on recovery and resolution frameworks for financial institutions other than banks. In our response we make the following points:  

• No common recovery and resolution regime that would fit all financial market infrastructures (FMI)
• Recovery and resolution regimes should distinguish between those FMI that take credit risk and those that do not
• The resolution authority’s power to halt payments should not lead to an automatic suspension of all transfers
• Loss allocation should not generally extend to the margin funds of non-defaulting participants in a CCP and margin/collateral should not be included in any ‘bail-in’ measures where this would have systemic risk impact
• Recovery and resolution regimes should not give rise to open-ended liability for stakeholders
• Important to define and distinguish between “recovery” and “resolution”
• Cross-border coordination of recovery and resolution measures is critical to avoid systemic disruption in cross-border and interlinked financial market infrastructures

LSEG response to EC consultation on recovery and resolution of financial institutions other than banks.(file pdf - 383 KB)