EU Watchdog Resets Trading Rules To Guard Against Defaults

Law360, London (January 8, 2020, 1:50 PM GMT) -- Europe’s top markets watchdog has clarified trading rules designed to protect against surprise defaults by intermediaries after a high-profile incident triggered deep losses on the Nasdaq stock exchange.

The European Securities and Markets Authority said Tuesday it could also enact tougher criteria for how central counterparties in the European Union determine who can act as a clearing member ⁠— an intermediary that facilitates the contract between buyers and sellers in over-the-counter derivative trades.

The regulator has acted to protect markets after a trader lost €114 million ($127 million) on the Nasdaq exchange in 2018 and was declared in default.

ESMA has published the...

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