ECB could still pursue state clearing house

THE nationalisation of over-the-counter (OTC) derivatives trading in the Eurozone could still be on the table despite the exit of Axel Weber from the race for European Central Bank presidency.

As City A.M. revealed, the proposal to create an ECB-run clearing house for OTC products such as collateralised debt obligations and interest rate swaps formed a key part of Axel Weber’s campaign agenda for the ECB before he was forced out of the race last week.

But some observers think that the ECB’s development of TARGET2 Securities, or TS2, a trading platform for bonds and equities in the Eurozone, could be a precursor to the creation of a similar platform for derivatives.

Pinsent Mason’s Tony Anderson says: “You wonder if they’re trying to develop synergies, bearing in mind the focus around OTC derivatives and the political willpower to have central clearing houses bring OTC transactions on-market.”

The EU is currently drafting regulation to force OTC derivatives trades into regulated central clearing houses even as the ECB develops its own more extensive trading platforms.