ISDA Calls for CCP Supervisory Cooperation

ISDA advocated for a cooperation-based approach to central counterparty ("CCP") regulation and warned that a "location policy," which would force certain systematically important institutions to come under EU supervision, would present significant risks. ISDA argued that a European Commission proposal that could potentially compel systemically important CCPs to relocate to the European Union ("EU") could cause market fragmentation, reduce competition, elevate systemic risk and raise costs for end users.

In calling for a cooperation-based approach, ISDA made several recommendations, including:

• authorities across jurisdictions should enter cooperation agreements in advance of a potential CCP default;

• supervisors should practice deference when appropriate in order to "avoid conflicting or duplicative requirements";

• supervisors should communicate with one another with regard to planned supervisory activities; and

• authorities should ensure that CCPs have access to liquidity in order to reduce risk.