A combination of external problems and self-inflicted plagues has landed the financial sector in a situation where financial stability is at risk. Looking ahead, when we discuss how to avoid a repetition of this untenable situation, it is important to remember what caused it.
If UK CCPs are not recognised under EU regulations after Brexit, firms engaging in, for example, interest-rate swap transactions would be unable to clear them in the UK. This issue is compounded by the lack of sufficient substitute capacity elsewhere.