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Clearinghouses Face EU Push on Too-Big-to-Fail Risks 

December 17, 2014
Jim Brunsden, Bloomberg

The European Commission will propose legislation next year to toughen regulation of clearinghouses in a bid to prevent financial turmoil should one of them fail.

Jonathan Hill, the European Union’s financial-services chief, said in a Dec. 15 interview in Brussels that the bill will be a priority.

Measures taken by regulators to boost the robustness of the over-the-counter derivatives markethave led to a concentration of risk in clearinghouses, Hill said. “That having been done, I think you need to take steps to mitigate it,” he said. “It’s an important issue.”

The Group of 20 nations has called for greater use of clearinghouses as part of their response to the crash that followed the 2008 collapse of Lehman Brothers Holdings Inc. The measures include forcing standard types of OTC derivatives to go through central clearing in a bid to boost transparency and contain the fallout from individual defaults.

Read more: Bloomberg

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