Riksbank and the Bank of England reaffirm commitment to LCH oversight cooperation
25 September 2023 UK
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The Riksbank, the central bank of Sweden, and the Bank of England have released a joint statement reaffirming their commitment to cooperative oversight of LCH Ltd.
The banks say this commitment helps to preserve financial stability while benefiting cross-border clearing activity, which in turn supports institutions’ access to global financial markets.
Under the Financial Services and Markets Act 2023, the Bank of England will have specific obligations to consider the impact of its policy-making decisions on the financial stability of jurisdictions outside the UK which make use of entities such as LCH.
LCH, the London Stock Exchange Group-owned clearing house, clears the majority of SEK-denominated interest rate swaps as well as other financial instruments. The joint statement frames LCH as a key financial market infrastructure in Sweden.
Furthermore, the Riksbank is a signatory to the global college agreement for LCH, through which the Bank of England cooperates with other authorities regarding the clearing house’s supervision.
In the statement, the Bank of England welcomes the new powers Riksbank received at the start of 2023 which aim to ensure stability and efficiency in the Swedish financial system.
The banks say they will jointly consider possible policy tools to manage potential emergency situations.
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, said: “The UK has a long and strong tradition of cooperation and openness with regulatory authorities around the world. This enables financial market infrastructure based in the UK to support sound markets and financial stability. This joint statement with the Riksbank is an example of this.
“The strong cooperation that exists between the Riksbank and the Bank of England in relation to the oversight and supervision of LCH reflects international standards on how cooperation and deference between authorities can mitigate the risk of fragmented, global markets.”
Erik Thedéen, governor at the Riksbank, says: “Cooperation and information sharing between authorities is crucial, both in normal and more turbulent times. This, together with an EU-equivalent regulation and supervision of LCH, is key to preserving financial stability in Sweden. This statement is an illustration of the value the Riksbank puts on the cooperative arrangements between the Bank of England and the Riksbank.”
The banks say this commitment helps to preserve financial stability while benefiting cross-border clearing activity, which in turn supports institutions’ access to global financial markets.
Under the Financial Services and Markets Act 2023, the Bank of England will have specific obligations to consider the impact of its policy-making decisions on the financial stability of jurisdictions outside the UK which make use of entities such as LCH.
LCH, the London Stock Exchange Group-owned clearing house, clears the majority of SEK-denominated interest rate swaps as well as other financial instruments. The joint statement frames LCH as a key financial market infrastructure in Sweden.
Furthermore, the Riksbank is a signatory to the global college agreement for LCH, through which the Bank of England cooperates with other authorities regarding the clearing house’s supervision.
In the statement, the Bank of England welcomes the new powers Riksbank received at the start of 2023 which aim to ensure stability and efficiency in the Swedish financial system.
The banks say they will jointly consider possible policy tools to manage potential emergency situations.
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, said: “The UK has a long and strong tradition of cooperation and openness with regulatory authorities around the world. This enables financial market infrastructure based in the UK to support sound markets and financial stability. This joint statement with the Riksbank is an example of this.
“The strong cooperation that exists between the Riksbank and the Bank of England in relation to the oversight and supervision of LCH reflects international standards on how cooperation and deference between authorities can mitigate the risk of fragmented, global markets.”
Erik Thedéen, governor at the Riksbank, says: “Cooperation and information sharing between authorities is crucial, both in normal and more turbulent times. This, together with an EU-equivalent regulation and supervision of LCH, is key to preserving financial stability in Sweden. This statement is an illustration of the value the Riksbank puts on the cooperative arrangements between the Bank of England and the Riksbank.”
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