On 23 March 2009, the Committee of European Securities Regulators (CESR) published a report on the market impact of the Lehman Brothers default. The report began with a brief discussion of the causes of the bankruptcy of Lehman Brothers Holdings Inc. It then set out some of the regulatory and industry responses to the challenges in the securities field including:
- Clearing and settlement. CESR notes that LCH Clearnet’s default rules allowed it to handle the Lehman Brothers default smoothly. However, CESR also stated that there are challenges that exchanges, clearing houses and other market participants have to face. Issues include the handling of unsettled transactions and the establishment of a central counterparty for standard, liquid CDS products such as indices.
- Insolvency regime for investment firms. CESR noted that there is no winding up directive for investment firms at the European level, in contrast to the position for credit institutions and insurers.