CCP12 Responds To FSB Discussion Paper

CCP12 - the Global Association of Central Counterparties responds to the discussion paper “Financial resources to support CCP resolution and treatment of CCP equity in resolution” published by the Financial Stability Board (FSB).

CCP12 greatly appreciates the continuous efforts of the FSB to further its work on financial resources to support CCP resolution and treatment of CCP equity in resolution to determine whether or not additional guidance is needed on these matters. In our response, we like to emphasize key points, which we feel the FSB should take into consideration:

• CCP12 stresses the importance of recognizing that CCPs have already incorporated default management and recovery measures into the rulebook, consistent with regulatory guidance set out by CPMI-IOSCO that share the primary objective of continuity of critical clearing services as stated in the FSB draft guidance.
• CCP12 supports establishing principle considerations to guide dialogue when establishing resolution frameworks based on particular jurisdictions.
• Further guidance on this subject should focus more on the actions of the resolution authority rather than CCP operations.
• Recovery measures established in the CCP rulebook ex-ante should be followed in their entirety to provide required risk and legal certainty to the market and its participants.
• CCP12 supports discussions around the situational complexity of resolution as it pertains to different CCP structures and ownership mechanisms and their financial resources.
• CCP12 does not support guidance that contemplates exposing the equity of a legal entity that may house the clearing service beyond what is stipulated ex-ante in the rulebook and relevant regulation and legislation.