Streetwise Professor Examines "Fundamental Tension" Underlying CCP Resolution Authority

In response to reports that the European Commission ("EC") is finalizing legislation on Central Counterparty ("CCP") recovery, University of Houston Finance Professor Craig Pirrong outlined the sources of "fundamental tension" that underlie the final resolution authority. Citing a statement in the EC's Executive Summary Sheet that the contemplated framework is likely to involve "a public authority taking extraordinary measures in the public interest, possibly overriding normal property rights and allocating losses to specific stakeholders" (emphasis supplied), Professor Pirrong concluded that the prospect of trampled rights "calls into question the prudence of creating and supersizing entities with such latent destructive potential."