This paper examines the supervision of Central Clearing Counterparties (CCPs) in Europe, since
they function as an important pillar of the Capital Markets Union. Our research indicates that the current
national-based supervision of CCPs leads to regulatory arbitrage and exposes the EU to huge financial risks,
especially in the context of the Brexit. We claim that a unified capital market should have a centralized capital
markets regulator to avoid a hazardous regulatory race to the bottom. We argue that the ECB is suitable
for taking on this common supervisor role in the short run, while ESMA should be equipped with enhanced
capabilities to accomplish the task in the long run.
