Jim Costa
Apr 261 min
This morning I saw this article, ultimately from Reuters: Regulators told to prepare for failed CLEARING houses… Something very large might be broken.
The full Reuters article can be read here: Link
Of interest to me is this passage:
It sets out seven resources and tools that regulators are required to pick from, such as "bail-in" bonds issued by clearers that can be written down to plug losses, resolution funds, cash calls during resolution, and equity in a first-loss position in resolution.
Regulators will have to state publicly which tools they have selected. Laws could need changing or introducing in some countries to give regulators access to such tools.
The [International] Financial Stability Board (FSB), has already laid out plans for a failing stock, bond and derivative clearing house to already have options on who they plan to steal from if they start to collapse. All they are recommended to do now is to publicly declare who they will tag as they fall.
To me that sounds like the FSB needs to know today that the major international Clearing Houses have a chambered round in their weapon. I don’t believe they are really suggesting hiring a lawyer to do research and change local laws.
Your thoughts and interpretations?
__________________________________
This is a 12 year old 12 minute YouTube on International Clearinghouses: Link