The European Association of CCP Clearing Houses (EACH) has responded to the CPMI-IOSCO consultation “FMIs’ management of general business risks and general business losses: Further guidance to the PFMI”.
They key messages conveyed by EACH Members are the following:
- No new standards – EACH Members would like to emphasise that the guidance should not evolve into explicit new standards and should not be treated as hard quantitative requirements by supervisors. In this respect we would also highlight that the new guidance appears to be inconsistent with certain existing European regulation, which could disrupt long-standing practices.
- Risk mitigation – European CCPs already have in place systems to mitigate different types of risk and potential losses related to general business risks.
- Orderly winding-down – When it comes to ensuring an orderly winding-down, European CCPs hold capital, including retained earnings and reserves, proportionate to the non-default risks that the CCP is exposed to.
- Governance and transparency – EACH Members consider that governance committees, such as the EMIR Risk Committee, consultations with affected entities on relevant changes to the CCPs clearing rules, regular exchanges with the competent authorities as well as the disclosures CCPs already made available by CCPs, provide for a sufficient level of transparency and engagement with CCP participants.
Please see the full response here.
