CPMI and IOSCO proposed draft guidance for authorities on how to design and run supervisory stress tests for central counterparties (CCPs). This consultative report contains a framework for supervisory stress testing of CCPs, which the authorities can use to evaluate the collective response of a set of CCPs to one or more financial stresses. Comments should be submitted by September 22, 2017.
As a result of the Group of 20 countries, or G20, derivatives reforms and owing to the move toward central clearing of standardized OTC derivative contracts, the role of CCPs in the financial system has gained in importance. Conducting stress tests of this type could help authorities to better understand the impact of a common stress event affecting multiple CCPs on the broader economy. It would also help the authorities to understand the implications of interdependencies between markets, CCPs, and other entities, such as liquidity providers and custodians. “The framework is also flexible enough to allow authorities to design a stress test that is best suited to their circumstances," said IOSCO Board Chairman Ashley Alder. The framework covers six components of a stress-testing exercise:
Setting the purpose and exercise specifications
Establishing governance arrangements
Developing stress scenarios
Collecting and protecting data
Aggregating results and developing analytical metrics
Determining the use of results and disclosure
Comment Due Date: September 22, 2017
Keywords: International, CPMI, IOSCO, Securities, CCP, OTC Derivatives, Stress Testing
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).
US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
ECB published eleventh issue of the Macroprudential Bulletin, which provides insight into the ongoing work of ECB in the field of macro-prudential policy.
HM Treasury issued a call for evidence seeking views to reform the prudential regulatory regime—also known as Solvency II—of the insurance sector in UK.