The Risk Controllers: Central Counterparty Clearing in Globalised Financial Markets

5

Innovation in Europe

5.1 BREAKTHROUGH IN LE HAVRE

The founding of the Caisse de Liquidation des Affaires en Marchandises in Le Havre in November 1882 marked a revolutionary departure in the way clearing was conducted and managed as a business.

Set up to support the city's recently established commodity futures markets, the Caisse in Le Havre established a commercial lead over all European rivals by guaranteeing the contracts that it registered. Within a decade the other leading commercial centres of northwestern Europe had been forced to follow Le Havre's example and create clearing houses that supported futures exchanges with a guarantee function, often in the teeth of fierce opposition from established trading interests.

In the 1880s, the world was in a phase of development with similarities to that a century later. Its leading economies were experiencing an early form of globalisation, spurred on by industrialisation, international trade and faster and more effective communications. The absence of major wars in Europe between 1871 and 1914 helped.

Le Havre was a fast growing and busy port.¹ The Paris basin was its immediate hinterland and it had well developed trade links to the Americas and the Pacific. It was one of Europe's leading importers of coffee, reflecting France's position as the world's third largest consumer of coffee before the First World War. It was also continental Europe's main port for importing US cotton – a legacy of France's role in the American War of ...