On October 5, the European Commission published a consultation paper on a possible framework for the recovery and resolution of non-bank financial institutions.  The consultation paper covers three types of institutions and focuses on:

• central counterparties and central securities depositories (financial market infrastructures);
• insurance and reinsurance firms; and
• payment systems and other non-bank financial institutions.  

For each of these groups of financial institutions the consultation paper first looks to ascertain how and when the failure of a financial institution can threaten the stability of the financial markets, and then considers what arrangements could be needed to ensure that such failures are resolved in an orderly manner. 

The initiative follows the adoption, on June 6, of a Commission proposal for an EU framework in this area for banks and investment firms.  The Commission invites responses by December 28.