ISDA and FIA Respond to BoE’s Supervisory Stress Testing of CCPs Consultation

In June 2021, the Bank of England (BoE) published a discussion paper on supervisory stress testing of central counterparties (CCPs). ISDA and the Futures Industry Association (FIA) responded to the consultation.

Overall, the associations agree with the presented approach. The points made in the consultation response include:

  • Given the huge effort to run supervisory stress tests (SSTs), the associations propose for global regulators to join forces and run joint SSTs;
  • The associations welcome the inclusion of operational scenarios, especially stressing of porting assumptions and propose to also include non-default losses as a result of defaults;
  • The associations propose to not only use plausible scenarios, but also include scenarios that probe recovery and resolution situations;
  • The associations propose to analyze contagion risk, for instance by linking the losses at CCPs to the available resourced of clearing members;
  • The associations propose additional disclosure, including some disclosure specific to each clearing member.

 

Documents (1) for ISDA and FIA Respond to BoE’s Supervisory Stress Testing of CCPs Consultation

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,...