Should clearing be treated as a utilty?


More/Less regulation, the threat or virtue of HFT, the 'Dr. Evilness' of banks, there is no ultimate truth. Truth comes in many forms and is, amongst others, dependent on ideological framework, cultural background, experience, a vested interest or simply the hand that feeds you.

With that in mind, it is interesting to read this research article by the Heritage Foundation, a conservative US think thank. One of its missions, to repeal Dodd-Frank. 

In this article, the author points us to article VIII of Dodd-Frank, which provides the opportunity to designate PCS (Payment, Clearing, Settlement) companies as Financial Market Utility. Which basically means that they can be considered to be of systemic importance and therefore "too big to fail".

To the conservative mind, this is an outrage. In their view it, again, crosses a border between government and private enterprises, It would be anti-competitive, raises prices and concentrates risk.

Biased, of course but nonetheless an interesting read. I wonder if European Regulation also has this ‘utility’ designation for European Institution. Click here for the full article.