H M Treasury has established a taskforce under the leadership of Sir Andrew Large to review responses to the recent Green Paper on Operational Disruption. Copies of the responses are now available via the H M Treasury website.
Amongst the respondents, the ACT was the sole organisation representing the interests of the issuer community.
The ACT, in its response available here, expressed the view that documentation, not legislation, will be key to corporates protecting their interests in the event of a major disruption to the UK financial markets. The ACT warned that the introduction of new legislation giving powers of intervention to government in the event of an emergency in the financial markets could damage the UK’s reputation as a financial centre. Such a move could increase political risks of doing business in the UK, could potentially be disregarded by EU and other overseas courts leading to increased uncertainty and might also cause the introduction of new systemic risks. If an interventionist approach was to be taken, it would need to be part of a joint initiative either across the EU or the G10 nations.
Instead, the ACT was of the opinion that the authorities should concentrate resources on educating corporate customers to the potential impacts of operational disruption and on encouraging them to ensure that documentation for their financial transactions adequately covered such eventualities. To this end, the ACT emphasised the importance of exchange and clearing rules dealing with operational disruption in a comprehensive and consistent manner. Corporate treasurers were also urged to regularly review bi-lateral contractual agreements.
