Central counterparties (CCP) and the new transnational lex mercatoria

This article researches the sources of law governing the operations of Central Counterparty (CCP) systems. The CCP is a sui generis financial institution which guarantees and facilitates the settlement of claims between a group of merchants. It will be demonstrated that the new transnational lex mercatoria is the main source of law governing a CCP's operations. It is submitted that the lex mercatoria should remain the primary source of law [Vol. 10 CCP AND LEX MERCA TORIA governing CCP arrangements because it has worked successfully for decades and there has never been a major CCP failure.' Although this paper focuses on the law from a common law perspective, the 'transnational' aspect of this legal regime means that it applies universally to CCPs operating in most jurisdictions.