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CFTC 2024 Supervisory Stress Tests Show DCOs Can Withstand Market Shocks

In its fourth Supervisory Stress Test covering derivatives clearing organizations ("DCOs"), the CFTC reported that all individual DCOs were "well capitalized to withstand multiple defaults, concurrent with extraordinarily large market shocks."

The CFTC concluded that:

  • "individual DCOs hold sufficient financial resources to withstand many extreme and implausible price shocks, along with multiple defaults of their members."
  • "potential costs to non-defaulting members do not appear to be problematic," even under extreme scenarios.
  • the "effects of interconnectedness were muted across DCOs, except for extremely implausible scenarios."

Primary Sources

  1. CFTC: Press Release: CFTC Announces Supervisory Stress Test Results
  2. CFTC: Supervisory Stress Test of DCOs: Reverse Stress Test Analysis and Results (2024)

Tags

Regulated Activities
Stress Testing
Regulated Entities
Clearing Orgs.
Body of Law
CEA Regulation
Jurisdiction
US - Federal
Organization
CFTC, NFA, CFTC Markets
Sub-Author
CFTC