After the market turmoil caused by the COVID-19 pandemic in March and April 2020, the ISDA Clearing Member Committee analyzed how central counterparty (CCP) risk management frameworks reacted to the crisis, based on feedback from CCPs.
The results show CCPs dealt with the crisis well, managing record volumes while most of their staff worked from home. In total, there were three member defaults or close-outs, none of which threatened financial stability. This reflects a more stable financial system overall: clearing members are much better capitalized and hold more liquidity compared to the last crisis.
However, some issues did emerge. Procyclical initial margin requirements exacerbated market stress at certain points. Clearing members also lacked timely information about backtesting breaches and procyclicality in margin models. The paper makes recommendations to address both of those points.
Documents (1) for COVID-19 and CCP Risk Management Frameworks
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ISDA In Review – August 2026
A compendium of links to new documents, research papers, press releases and comment letters published by ISDA in August 2026.
Remove Bureaucracy from Cross-margin Approvals
Cross-margining programs play a critical role in financial markets. By ensuring margin requirements more closely reflect the actual risk of a portfolio of products, they reduce liquidity strain and improve market efficiency, both of which will become even more important...
Joint Response on CCP Resolution
On September 7, ISDA and FIA responded to a Bank of England (BOE) discussion paper on central counterparty (CCP) resolution. The associations support greater clarity on valuation capabilities prior to a crisis scenario and the boundary between recovery and resolution,...
Expanding Legal Agreement Coverage in the CDM
This paper examines the recent extension of the Common Domain Model (CDM)1 to represent two of the most significant, and previously undeveloped, areas of its legal agreement model: umbrella agreements and contract amendments. Umbrella agreements are widely used to document...