While these links are not new, they now warrant closer attention for two reasons. First, the financial system has come to rely more on central counterparties. The introduction of mandatory central clearing requirements in response to the crisis has made financial markets safer and more transparent. This is in large part thanks to the European Parliament’s push for stronger financial regulation, such as the European Market Infrastructure Regulation (EMIR). While this strengthening is of course welcome, it also means that CCPs have become more systemic. Second, the United Kingdom’s decision to leave the EU means that, under the current legislative regime, several CCPs clearing significant volumes of euro-denominated business will be operating outside the framework of EU regulation and the safeguards this provides. In this context, the Commission’s EMIR II proposal, currently being discussed by this committee, is a welcome and necessary initiative. The existing regime was never intended to cope with large-scale euro-denominated clearing activities being carried out in a country outside the EU. The EMIR II proposal would enable EU authorities to directly supervise systemically important third-country CCPs on the basis of EU regulatory requirements using EU supervisory instruments. The proposal provides for an enhanced role for the central bank of issue in this context, reflecting the strong links between clearing and monetary policy. The indispensable corollary to the EMIR II proposal is the recommendation to amend Article 22 of our Statute, which was unanimously adopted by the ECB’s Governing Council last June.
And, second, I will share three things that I think we – as supervisors – need to do to strengthen supervision of global firms and, at the same time, make it easier to get our jobs done. Three things global firms with U.S. presence can do •  First, improve communication and transparency with supervisors. Communication between supervisors and supervised institutions has to start with a “no surprises” philosophy, which serves as the basis for building the right channels of communication and confidence between firm and supervisor. This means identifying and discussing issues that could grow into significant risk events – even before all of the facts may be known or collected. “No surprises” also means more timely information sharing with key supervisors. Supervisors talk regularly and pass along key information; we are fine doing so, but firms could position themselves better if they communicate significant items to core supervisors on similar timetables. Given the global management structures of many business lines and risk functions, a risk event in one jurisdiction may have an immediate impact in other jurisdictions. Another element of improving communication is sharing more global information with host supervisors. In order for us to better understand your operations and to put the U.S. operations into the global context, we need to have a better understanding of the global operations. Many, if not most, firms assert that they manage businesses and risk on a global basis.