REGIONAL CENTRAL COUNTERPARTY

REGIONAL CENTRAL

COUNTERPARTY

A SOLUTION FOR CENTRAL AND EASTERN EUROPE

WWW.

REPORT QUALIFICATIONS/ASSUMPTIONS & LIMITING CONDITIONS

European Bank for Reconstruction Development (EBRD) and Oliver Wyman have published a report

assessing the feasibility of a regional Central Counterparty in Central and Easter Europe.

Neither Oliver Wyman nor the EBRD shall have any liability to any third party in respect of this report or any actions

taken or decisions made as a consequence of the results, advice or recommendations set forth herein.

This report does not represent investment advice or provide an opinion regarding the fairness of any

transaction to any and all parties. This report does not represent legal advice, which can only be provided

by legal counsel and for which you should seek advice of counsel. The opinions expressed herein are

valid only for the purpose stated herein and as of the date hereof. Information furnished by others, upon

which all or portions of this report are based, is believed to be reliable but has not been verified.

No warranty is given as to the accuracy of such information. Public information and industry and statistical data are

from sources Oliver Wyman and EBRD deem to be reliable; however, Oliver Wyman and EBRD make no representation

as to the accuracy or completeness of such information and has accepted the information without further verification.

No responsibility is taken for changes in market conditions or laws or regulations and no obligation is assumed

to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof.

CHAPTER

TITLE

3

CONTENTS

Executive summary

1.

CEE capital markets

2.

Why central clearing is important

3.

Rationale for a regional CCP

4.

Establishment of the regional CCP

5.

The business case for the regional CCP

6.

Conclusion

7.

Next steps

8.

Bibliography

EXECUTIVE

SUMMARY

EXECUTIVE SUMMARY

REGIONAL CENTRAL COUNTERPARTY

5

Counterparty (CCP). This assessment has found that the

creation of a regional CCP across CEE countries will further

drive capital markets development and economic growth.

Economies in Central and Eastern

Europe (CEE) have made significant

progress in converging with

the rest of the European Union

(EU) over the past 20 years.

Our finding is grounded in three statements:

However, there is potential for greater convergence. With

the establishment of the Capital Markets Union initiative

at the EU level and a new EU-wide regulatory regime,

CEE countries have an unprecedented opportunity to

accelerate the development of their local capital markets

to sustain economic growth. Part of the answer lies

in overcoming the current fragmentation of the local

capital markets in order to appeal to foreign investors

In light of this, the EBRD and Oliver Wyman decided to

launch a report assessing the feasibility of a regional Central

First, the growth, deepening and diversification of local

capital markets is essential for economic convergence

in the CEE region. Today, CEE local capital markets lag

behind their European peers in terms of the number and

size of the markets as well as transaction volumes and

international investment, after adjusting for the relative

size of the economy. By reducing this gap, officials can

expand access to debt and equity financing for local

businesses and bring fresh dynamism to local economies.

The latest figures from the World Bank for the EU and US

economies demonstrate a clear relationship between

economic development and capital markets development.

Figure 1: The capital markets ecosystem

Financial instrument/Capital

Issuers

(Financial institutions,

non-financial institutions,

quasi-sovereigns)

Financial

intermediaries/

agents

Investors

Asset managers

(e.g. mutual funds, hedge

funds); asset owners

(e.g. insurers, banks,

pension funds,

governments,

agencies)

(Broker-dealers, banks,

asset managers)

Market intermediaries and infrastructure providers

Information/rating providers

Market benchmarks and indices

Data distribution vendors

Risk assessment providers

(e.g. credit bureaus, rating agencies)

Infrastructure providers

Exchanges

Custodians/depositories

Clearing and settlement system providers

Market enablers

Regulation and legislation

Corporate governance and investor protection

Accounting and reporting standards

Securities regulation

Industry regulation

Social and macroeconomic policies

Pension/retirement policies

Tax regimes

Education (financial)

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