FSB Proposes Guidance on Financial Resources to Support CCP Resolution
FSB is consulting on guidance on financial resources to support central counterparty (CCP) resolution and on the treatment of CCP equity in resolution. FSB has set out guidance on assessing the adequacy of financial resources to absorb losses and to cover other costs in resolution. The comment period on the guidance, which is intended to assist CCP resolution authorities, ends on July 31, 2020.
The draft guidance is based on the concepts included in a discussion paper on financial resources to support CCP resolution and the treatment of CCP equity in resolution, which the FSB published for public consultation in November 2018. The draft guidance takes into account the comments received in that earlier public consultation and feedback from the resolution authorities of CCPs. The guidance proposes five steps to guide the authorities in assessing the adequacy of the financial resources of a CCP and the potential financial stability implications of their use. The authorities should:
- Identify hypothetical default and non-default loss scenarios (and a combination of them) that may lead to a resolution of a CCP
- Conduct a qualitative and quantitative evaluation of existing resources and tools available in the resolution of the CCP
- Assess potential resolution costs
- Compare existing resources and tools to resolution costs and identify any gaps
- Evaluate the availability, costs and benefits of potential means of addressing any identified gaps
The guidance addresses the treatment of CCP equity in resolution. It provides a framework for resolution authorities to evaluate the exposure of CCP equity to losses in recovery, liquidation, and resolution and how (where it is possible) the treatment of CCP equity in resolution could be adjusted.
Related Links
Comment Due Date: July 31, 2020
Keywords: International, Banking, Securities, CCP, CCP Resolution, Resolution Planning, OTC Derivatives, FSB
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.