September 23, 2015

Global Regulators Release CCP Progress Report and 2015 Workplan

Steven Lofchie Commentary by Steven Lofchie

The Financial Stability Board ("FSB"), the Basel Committee on Banking Supervision ("BCBS"), the Committee on Payments and Markets Infrastructures ("CPMI") and IOSCO released a 2015 central counterparties ("CCPs") workplan and a progress report detailing the agencies' efforts to enhance the "resilience, recovery planning and resolvability" of CCPs. The workplan focuses on CCPs that are systemic across multiple jurisdictions.

Commentary

The plan focuses on the financial soundness of, and resolution plans for, CCPs. However, this may miss the greater systemic risk: that the authority of the CCPs to call for unlimited margin from clearing participants drains liquidity from the markets, with the result that, in a market crisis, the CCPs are able to save themselves, but may pull others down.

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