The US-based Association, which represents securities firms and banks that underwrite, trade and sell debt securities in Europe and in the United States as well as internationally, says it favours market-based approaches over governmental mandates in dealing with potential financial disruptions. The BMA also maintains that the primary focus in an emergency should be on keeping markets open.

The Association filed its comment letter in response to a Treasury consultation paper on the financial system and major operational disruption.

Scott Rankin, head of the BMA's European office, says a market-based approach provides meaningful incentives for firms to invest in systems and employees and to prepare contingency plans that will allow them to continue operations in the event of market disruptions.

Moreover, he cautions against the UK and EU institutions taking parallel but inconsistent approaches to addressing these situations, which would ultimately be harmful since the UK and the Eurozone bond markets are so closely bound to wider global markets and the financial infrastructure of other countries.

According to Rankin, "the increasingly international nature of fixed income and derivative markets makes further review of the need for UK legislative authority critical".

Governmental suspension power is inconsistent with policies in other countries and, since the over-the-counter market is among the most international of the markets, this raises further questions about which contracts would or would not be affected by a UK trading suspension, causing further market distress, says Rankin.

"The Association believes that it would be extremely difficult for government, in an emergency situation, to act in a way that would not add to disruption in the markets," he adds. "We do not feel that a strong enough case for governmental intervention was made in the HM Treasury Paper, and we continue to favour market-based approaches in times of emergency."