The European Association of CCP Clearing Houses published today the attached response to the issues included in the consultations published by the European Commission concerning the review of the Directive on financial collateral arrangements (FCD) and the review of the Directive on settlement finality in payment and securities settlement systems (SFD).
While the FCD and SFD offer a certain degree of protection for collateral arrangements and settlement finality, EACH believes that these protections should be further enhanced to ensure that CCPs are able to securely perform their risk management functions for the benefit of its clearing members and the market as whole. Our suggestions to improve the protections awarded by FCD and SFD include:
- FCD protection in case of close-out netting even in the scenario of a clearing member resolution.
- FCD protection for all the types of collateral currently accepted by CCPs.
- SFD protection for both business as usual (BAU) and default management activities of the CCP as included in its default rules, and to any actions carried out by a CCP in relation to their default rules.
- SFD protection to cover entities that do not themselves take rights and obligations vis-à-vis the system / the system operator, but fulfil tasks that are closely related to the functioning of the system.
- SFD protection for indirect participants if this furthers protects the CCP’s default management rules and procedures.
For more information, please find attached the EACH note or visit our website www.eachccp.eu
