##it referendum in 2016. i am strictly neutral on brexit as a public official. i knew then that our job was to work out how to implement something that, let's be honest, had not been planned. in the area of financial services, clearing was going to be probably the hardest area for us, because – and i will come back to this point – it is inherently international in many parts, and particularly the parts we do in london. i knew immediately after the referendum that it was critical for the uk not to become isolated and certainly not isolationist. that would be the road to a very bad outcome for the city of london. we needed friends, both in deeds and words, those who would be prepared to stand by us, and put up with uncertainty while we worked out the best course. chris, you and mike were those people – friends when we were in some need. 1 / 5 bis - central bankers'speeches now, it is the case that, as a internationalist, mike arrived in the world of clearing at the right time. it is a fairly esoteric activity, always important, but also often in the background. we quite like it to be humming away safely in the background. but the global financial crisis had emphasised that we had undervalued its importance, that the world would have been safer if we had put it more into the centre of the financial system. but, to do that it must be done safely and soundly. unsafe clearing would be worse than no clearing, it would amount to concentrating the risk in one unsafe house. and so, if we are asked to list the very big financial system changes post financial crisis, we should naturally start by saying that we have put clearing at the heart of the system. central counterparties ( ccps ) are a key to mitigating counterparty credit risk, which has become even more relevant following the crisis and, in so doing, bring significant financial stability benefits. the experience of the collapse of lehman brothers demonstrated that ccps should be able to dampen the shock of a major counterparty credit failure. one of my abiding memories of the lehman weekend was the attempt to organise an ad - hoc trade position compression exercise, to net down the positions. it wasn't possible, and the hard lesson was that only permanent institutional structures with clearing houses at their heart can achieve the ends we desired. but, of course, we know that ccps, can pose significant risks

to the stability of the financial system if they are not properly managed. a consequence of central clearing is that ccps themselves become a financial network which can bring about the contagion of financial instability if they are not robustly established and operated. in line with g20 commitments following the financial crisis, the introduction of mandatory clearing for various classes of over - the - counter derivatives has driven an increase in the systemic importance of ccps. in the banking world, that tendency for banks to grow and become more globally systemic led to hostility to allowing very large banks which could be too big to fail. clearing is different. its not just that clearing didn't cause the crisis, though just to be clear, it didn't. rather, its more than that. up to some point, and that point can naturally be large, there are benefits of scale and scope in clearing. yes, there is contagion risk if a ccp fails, and especially where it is large in its market, but there are real benefits of scope and scale. and, this naturally leads to the international dimension that mike so much emphasised. the global nature of many financial markets means that clearing is naturally a cross - border activity. cross - border clearing also brings significant benefits. a single ccp operating across multiple jurisdictions and currencies can provide efficiencies and reduce risk through multilateral settling of exposures across counterparties in different jurisdictions. this puts an obligation on us as regulators of clearing houses. we have a duty to enable the safe operation of the global financial system. public authorities have risen to this duty, supervising standards on ccps have been strengthened and new international standards have driven the establishment of credible ccp resolution regimes. we also have a deep sense of responsibility for the impact of our actions on 2 / 5 bis - central bankers'speeches other countries. and, we take this very seriously, as we must. in the uk, as the regulator we are required in any exercise of our rule - making power to consider the effects of these rules on the financial stability of any country where one of our clearing houses provides services, and we must act in a way that does not favour one jurisdiction over another. this is of course all common sense. we all recognise that the interconnectedness of global markets means that any shocks in one part of the world can quickly reverberate and cause stress elsewhere. but common sense though it is, i can tell you that it's a lot