The European Association of CCP Clearing Houses (EACH) welcomes the opportunity to provide feedback to the FSB consultation on resources and tools for CCP resolution. In summary:
- EACH overall agrees with the four parameters for resolution-specific resources and tools – We commend the FSB for structuring their analysis around four parameters that cover the availability and readiness of resources as well as the effects that their use could have on the CCP participants and the whole market. We especially welcome the reference to the need to align incentives across recovery and resolution, given that an incorrect structure of the resolution phase could disincentivise CCP participants from actively contributing towards a successful recovery.
- CCPs play a very different role from banks – EACH would like to kindly recommend the FSB not to take into consideration tools for banking resolution that would be inappropriate in the context of CCP resolution, such as bail-in bonds, total loss-absorbing capacity (TLAC) ratio and a single resolution fund.
- Additional resolution-specific tools – We note that the FSB has not considered other tools included in existing resolution regimes such as the EU and UK ones notably some position and loss allocation tools such as partial or full tear-up, sale of business tools and bridge CCP tool. We believe that any guidance for authorities to consider financial resources and tools for central counterparty resolution would be incomplete without a reference to these tools, which are already referenced in previous FSB documents.
For more information, please visit the EACH website www.eachccp.eu
