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UK investors, banks at odds over who to cover clearing house risks 

February 27, 2014
Huw Jones, Reuters

Britain's race to shield taxpayers from a potentially new breed of "too big to fail" financial firms is pitting investors against banks over who pays the bill if one of the clearing houses handling the trillions of dollars of trades made each year in financial markets runs into trouble.

Investors in the form of pension funds and asset managers  who buy financial assets like derivative instruments which pass through clearing houses, say they should not have to bail out a clearer in danger of going bust.

The banks, who sell the products, say investors have little choice but to bear some losses as they would take a hit in any case if the clearing house went under.

This month the Bank of England became the first regulator in the EU to require clearing houses to have a system for allocating

Read more: Reuters

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