Brussels, 04/03/2015 (Agence Europe) - The General Court of the EU has found that the ECB cannot require the central counterparties (CCP) to be located in the eurozone.
In July 2012, the ECB adopted an oversight framework laying down the role of the Eurosystem in monitoring the payment, clearing and settlement systems. According to the ECB, major central counterparties, which have a daily net credit exposure of more than five billion euros in any of the main categories of products marked in euros, are vital components of the financial system. It argues that this infrastructure should be legally established and controlled within the eurozone.
The United Kingdom, which is outside the eurozone but home to Europe's largest financial centre, brought an action before the Court of Justice of the EU to annul this oversight framework, arguing that the ECB did not have the authority to impose a location requirement of this kind on the central counterparty clearinghouses (case T-496/11).
In a judgment returned on Wednesday 4 March, the General Court upheld London's position, annulling the oversight framework of the ECB. It finds that the treaty (article 22 of the FTEU on the Eurosystem statutes) allows the ECB to adopt regulations to ensure the effectiveness and security of payment systems, including those which feature a clearing stage, but gives it no stand-alone regulatory competence with regard to all clearing systems.
The General Court states that the ECB can ask the European legislator to modify the Eurosystem statute to add an explicit reference to the clearing systems. The Frankfurt-based monetary institute also now has two months to appeal against the Court's decision.
The British authorities welcomed the Court's verdict in their favour. “We have been consistently clear that there needs to be a level playing field for all countries in Europe's single market, whether they are in the eurozone or not. That's why we brought a legal challenge against the European Central Bank's utterly discriminatory location policy”, said the British Chancellor, George Osborne, describing the General Court's ruling as a “major win for Britain”. (Mathieu Bion)