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Nationalising a failed clearing house an option -EU document 

September 30, 2015

Huw Jones, Reuters

European Union governments could nationalise a failed clearing house to safeguard stability in the financial system, an EU document outlined on Friday.

The EU's executive European Commission is due to publish a draft law on handling collapsing clearing houses.

Clearing houses are third parties that stand between two sides of a stock or derivatives trade. Regulators are requiring swathes of the $630 trillion derivatives market to be cleared to improve safety and transparency.

Also known as central counterparties or CCPs, they are set to swell in size, prompting fears they could become the next set of "too big to fail" financial institutions unless there are clear rules on what to do if they get into trouble.

But in a discussion paper for EU states, the European Commission sets out an option that governments have all but scrapped for banks after public anger over lenders being shored up by taxpayers during the financial crisis.

Read more: Reuters

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