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EU Readies Plan for Clearing Crisis, the New Too-Big-to-Fail

  • Draft law on CCP recovery, resolution seen by Bloomberg News
  • EU Commission plans to make proposals by the end of the year
A tourist boat travels along the River Thames towards the City of London skyline in London, U.K., on Wednesday, Oct. 28, 2015. In its monthly consumer confidence index, GfK said a measure of Britons' outlook for the economy over the next 12 months dropped to minus 4 in October, the lowest reading this year.
Photographer: Simon Dawson/Bloomberg
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The European Union plans to give authorities sweeping powers to tackle ailing derivatives clearinghouses to prevent their failure from wreaking havoc throughout the financial system.

Draft EU legislation seen by Bloomberg sets out rules on saving or shuttering clearinghouses that would apply to firms such as London-based LCH. The proposals cover everything from the creation of resolution authorities to the powers they would have when winding a company down, including writing down shares, debt and collateral.