Manfred Wiebogen President ACI, The Financial Markets Association.
Manfred Wiebogen President ACI, The Financial Markets Association.

Each against all – or the request for enhanced cooperation

The past few weeks have seen some remarkable developments in the financial markets. A Supreme Court in Iceland has ruled on an FX settlement claim; EU 11 (FTT) are defining their own way for taxation, whilst some countries are preparing for a currency war. All these issues need enhanced cooperation – amongst politicians, amongst financial institutions and above all among each other.

On February 25th the Supreme Court of Iceland confirmed a decision of the District Court: After the fall of Lehman in 2008 most of the important Icelandic banks were put under receivership. Unluckily, a local bank failed to fulfill its settlement obligation to an international bank when the same paid at maturity one morning. The counter-payment of the currency was however never made, neither was the USD amount repaid. The case ended up to court and even the ACI The Financial Markets Association was asked for its expertise in this “knotty clash”. The case may simply be described as ‘Settlement Risk’ (which would not have happened under CLS). Nevertheless, by the Supreme Court’s judgment, the duty to repay the USD amount has been confirmed. Nearly five years of negotiations came to an end. I am tempted to say ‘justice is back to the markets’, a positive story in difficult times. The EU 11 Financial Transaction Tax approach is confusing and unsettling for the entire...continued

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