EU Readies Plan for Clearing Crisis, the New Too-Big-to-Fail

Draft EU legislation seen by Bloomberg sets out rules on saving or shuttering clearinghouses that would apply to firms such as London-based LCH.

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At present, euro-area clearinghouses are supervised by national authorities, not the European Central Bank, which oversees the currency bloc's banks. "There is a very logical argument that resolution should also be on the EU level," she said.

Once the authorities decide that a platform is beyond repair, the proposal gives them the option of selling the whole thing, or just its critical functions, to a viable competitor; of creating a publicly owned "bridge" company to take those functions over; and of imposing losses and allocating positions to clearing members, according to the proposal. The tools to be employed, and how they are used, would be set out in the resolution plan.