The Risk Controllers: Central Counterparty Clearing in Globalised Financial Markets

10

Continental Europe – CCPs in the Slipstream of Exchanges

10.1 ACRONYMS IN ABUNDANCE

As many as 49 exchanges and clearing organisations signed the March 1996 post-Barings memorandum of understanding in Boca Raton, Florida, which shows just how much the futures and options business had grown around the world since the 1987 crash.

Liberalisation, deregulation and the need of investors to obtain protection against market turbulence encouraged the spread of futures and options exchanges. As Figure 10.1 shows, the US share of financial derivatives trading on organised exchanges fell from more than three quarters in 1986 to less than half by 1995. LIFFE in London was an early example of this trend, having started operating in September 1982, nearly three years after the lifting of UK exchange controls.

An alphabet soup of acronyms followed, especially in continental Europe. Among the first countries to react was France, where political agreement to modernise financial markets and their infrastructure transcended the left–right political divide. The plans for a new futures exchange were hatched under a socialist government and promoted by finance minister Pierre Bérégovoy to improve the funding of a fast rising public debt.

MATIF¹ was launched to trade futures in France in February 1986. MONEP,² France's traded options market, followed in September 1987, by which time the administration had changed. Although France's socialist President François Mitterrand continued in office, the country ...