Italian clearing house to limit guarantees on LCH.Clearnet
MILAN, Sept 13
MILAN, Sept 13 (Reuters) - Italian clearing house Cassa di Compensazione e Garanzia is set to introduce new rules that will curb guarantees on cross-border transactions in case of a default of its ally LCH.Clearnet, sources with knowledge of the situation said.
The decision, similar to a measure taken by LCH last month, follows a request by European regulators to introduce procedures to address in an orderly fashion the possible bankruptcies of clearing houses that are closely interconnected, the sources told Reuters.
The move, expected to get a green light from Italian authorities by the end of September, will introduce a so-called 'cash settlement' in case of default, which shifts the bulk of risk on investors entering transactions with a clearing house.
Unlike LCH.Clearnet, the Italian clearing house plans to set up a fund that should guarantee transaction losses of up to 1 million euros.
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