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CEBS Public Hearing Summary: Materiality of Internalisation of Settlement and CCP-Like Activities

Overview

On 24 March 2009, the Committee of European Banking Supervisors (CEBS) held a public hearing to discuss the draft report on the materiality of internalisation of settlement and CCP-like activities. The hearing took place from 10:00 to 13:00 at the CEBS Secretariat, Floor 18, Tower 42, 25 Old Broad Street, London, EC2N 1 HQ. The event aimed to gather input from stakeholders on the findings of the CEBS working group and to explore the implications of internalisation and central counterparty (CCP)-like activities in the context of financial market infrastructure.

Agenda and Key Sessions

1. Introduction and Opening Remarks (10:00 – 10:15)

• Chairperson: Alicia Sanchis, Chair of the CEBS custodian bank working group.
• Purpose: To introduce the hearing and provide a brief outline of the work conducted so far by the working group.
• Focus: The materiality of internalisation and CCP-like activities in the financial sector.

2. Presentation of the Report (10:15 – 10:45)

• CEBS presented the responses to the call for evidence and the initial analysis of the working group.
• The report likely addresses the impact of internalisation on financial stability, transparency, and regulatory oversight.
• It may also highlight the risks associated with CCP-like activities and the need for appropriate supervisory frameworks.

3. Discussion with Attendees (10:45 – 11:30)

• Participants were invited to share their views on the draft report and to provide additional insights not included during the consultation phase.
• The discussion focused on:
  • The definition and scope of internalisation and CCP-like activities.
  • The materiality of these activities in terms of systemic risk and market integrity.
  • The regulatory implications and potential supervisory measures.
  • Case studies or real-world examples of internalisation and CCP-like activities.
  • Challenges in identifying and assessing the materiality of such activities.

4. Summary and Way Forward (12:00 – 12:45)

• The Chair presented initial thoughts on the next steps and possible regulatory actions.
• A closing discussion was held to explore the proposals and recommendations for addressing the materiality concerns.
• The session aimed to align stakeholders on the importance of transparency and oversight in internalised and CCP-like transactions.

5. Closing Remarks (12:45 – 13:00)

• Concluding remarks were made to summarise the key points discussed and to acknowledge the contributions of participants.
• The event ended with a note on the next steps and the importance of continued dialogue.

Core Content and Main Points

• Internalisation of Settlement refers to the process where trades are settled directly between counterparties without the involvement of a central clearing counterparty (CCP).
• CCP-like Activities involve functions similar to those of a central counterparty, such as netting, margining, and risk management, but may not be subject to the same regulatory oversight.
• The materiality of these activities is a central concern, as they can affect systemic risk, market transparency, and regulatory effectiveness.
• The CEBS working group is examining the implications of these activities for the stability and integrity of financial markets.
• The hearing aimed to collect feedback from industry participants, regulators, and other stakeholders to inform future regulatory actions.

Key Information

• Date: 24 March 2009
• Time: 10:00 – 13:00
• Location: CEBS Secretariat, Floor 18, Tower 42, London
• Chairperson: Alicia Sanchis
• Purpose: To discuss the materiality of internalisation and CCP-like activities and to gather input for the CEBS report.
• Structure:
  • Introduction and opening remarks
  • Report presentation
  • Stakeholder discussion
  • Summary and way forward
  • Closing remarks

Conclusion

The public hearing was a key step in the CEBS process to assess the materiality of internalisation and CCP-like activities. It provided an opportunity for stakeholders to engage with the working group and to contribute to the regulatory discourse. The insights gained will be crucial in shaping future policies and ensuring the resilience of financial market infrastructures in the European Union.