July 05, 2017

The International Committees (FSB, CPMI, IOSCO, and BCBS) published three guidance documents and two reports as part of their joint workplan on central counterparty (CCP) resilience, recovery, and resolvability. In April 2015, these four entities had agreed on a joint workplan to coordinate international policy issues related to CCPs. To fully realize the benefits of CCPs, it is vital that CCPs are subject to strong regulatory, oversight, and supervisory requirements.

The Committees published three guidance documents on CCP resilience, recovery, and resolution. These documents mark the completion of the key substantive priorities set out in the 2015 workplan. Regarding CCP resilience, CPMI and IOSCO are providing further guidance on the Principles and Key Considerations of the Principles for financial market infrastructures regarding financial risk management for CCPs, particularly on governance, credit, and liquidity stress testing, coverage, margin, and a CCP's contributions of its financial resources to losses. Regarding recovery, CPMI and IOSCO have updated their 2014 guidance on recovery for financial market infrastructures to provide clarifications in the areas of operationalization of recovery plans; replenishment of financial resources; non-default related losses; and transparency about recovery tools and how they would be applied. Regarding resolution, FSB has finalized the guidance, which complements the FSB Key Attributes of Effective Resolution Regimes, on implementing the Key Attributes in resolution arrangements for CCPs. The FSB guidance sets out powers for resolution authorities to maintain the continuity of critical CCP functions; details on the use of loss allocation tools; and steps authorities should take to establish crisis management groups for relevant CCPs and develop resolution plans.

 

The Committees also published the following joint reports:

 

Interdependencies study. BCBS, CPMI, FSB, and IOSCO have completed their first joint comprehensive data collection covering 26 CCPs from 15 jurisdictions that analyzes the interdependencies between CCPs and their clearing members and other financial service providers. The network relationships analyzed in this report are generally characterized by a core of highly connected CCPs and financial institutions and a periphery of less highly connected CCPs and financial institutions. The study will help guide further work on CCP resolution. By the end of 2018 an assessment will be made on the value of regular data collections from CCPs to support authorities' understanding of CCP interdependencies.

 

Implementation report. In this report, the Chairs of the FSB Standing Committee on Supervisory and Regulatory Cooperation, the FSB Resolution Steering Group, CPMI, IOSCO, and BCBS provide an update on the work undertaken to complete the key substantive priorities set out in the joint workplan. They also report on the establishment of crisis management groups for CCPs that are systemically important in more than one jurisdiction and set out new actions, including further work on CCP interdependencies and on the financial resources needs of CCPs in resolution and treatment of CCP equity in resolution. Based on further analysis and experience gained in resolution planning, FSB will determine, by the end of 2018, whether there is a need for additional guidance on financial resources for CCPs in resolution.

 

Related Links

Guidance on Resilience of CCPs

Guidance on Recovery of CCPs

Guidance on Resolution of CCPs

Interdependencies Study

Implementation Report

Joint CCP Workplan, 2015 (PDF)

Keywords: International, FSB, CPMI, IOSCO, BCBS, Banking, Securities, CCP, Recovery and Resolution Framework, Workplan, Resilience