Global regulators on Tuesday issued guidance for tougher central clearing requirements and an update on progress toward rules on how to resolve a clearinghouse if it fails.
The guidance, published by the Financial Stability Board and the Committee on Payments and Market Infrastructures-International Organization of Securities Commissions, targets issues such as the timing of a resolution in case a central counterparty fails because of a default of a major bank, treatment of CCP equity in any resolution and cross-border cooperation.
Also on Tuesday, regulators issued an update on rules to enhance CCPs' “resilience, recovery planning and resolvability” in the event that a CCP's recovery plan is unsuccessful, according to FSB's report on the guidance on its website.
In its statement, CPMI-IOSCO said the guidance focuses on six areas:
- governance and disclosure of a CCP's risk management framework;
- credit and liquidity stress testing;
- coverage of credit and liquidity resource requirements;
- margin;
- how much CCPs will use their own financial resources for losses; and
- recovery planning.
Each regulator is seeking comment on the guidance. Information on comment can be found on the CPMI-IOSCO website and the FSB's website.
