Firms told to use clearing houses

Firms buying derivatives to hedge against price movements ought to use clearing houses, not banks, the EU’s risk watchdog warned. Clearing houses are backed by default funds, whereas banks are riskier and charge high fees, the European Systemic Risk Board (ESRB) said. Though the ESRB carries no legislative clout, it nevertheless influences regulators and is chaired by European Central Bank president Mario Draghi. The bulk of the market is dominated by about 15 banks, which write bespoke contracts for firms for a fee.