Clearing of euro OTC derivatives post Brexit: An analysis of the present cost estimates

Volker Brühl

No 588e, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: In the context of the upcoming Brexit, a relocation of the clearing of euro-OTC derivatives for EU-based firms is the subject of controversial discussion. The opponents of a relocation argue that a relocation would cause additional costs for market participants of up to USD 100 bn over a period of 5 years. This paper shows that this cost estimate is fairly unrealistic and that relocation costs would amount to approximately USD 0.6 bn p.a., which translates to cumulative costs of around USD 3.2 bn for a transition period of 5 years. In light of the strategic importance of systemically relevant CCPs for the financial stability of the eurozone, the potential relocation costs should not be a decision criterion.

JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-eec
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:588e

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