ISDA has published a briefing paper that addresses the argument put forward by EU authorities that clearing at third-country tier-two central counterparties (CCPs) carries a financial stability risk, as well as risks to monetary policy implementation. In the paper, ISDA highlights that the tier-two designation depends largely on the CCP’s size, which does not translate to increased risk if the CCPs are subject to appropriate risk management and supervision. Furthermore, ISDA notes that European Market Infrastructure Regulation 2.2 ensured that tier-two CCPs from the UK are held to the exact same standards as EU CCPs and are directly supervised by the European Securities and Markets Authority, in addition to being supervised by the Bank of England, which affords EU authorities robust safeguards in a recovery scenario. This highlights that clearing at UK CCPs is not riskier than clearing at EU CCPs. Finally, the paper also covers concerns in relation to risks to monetary policy implementation and crisis scenario concerns.
Documents (1) for ISDA Briefing Paper on Clearing at UK Tier-two CCPs
Latest
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...
ISDA Omnibus Canadian Representation Letter
On September 2, ISDA published the Omnibus Canadian Representation Letter, which combines previously published representation letters drafted to assist firms in compliance with Canadian trade reporting, business conduct, regulatory margin and clearing classification rules. The Omnibus Canadian Letter is designed...
Joint Response on Cross-margining
On August 31, ISDA and FIA submitted a letter to the US Commodity Futures and Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on the agencies’ joint request for comment on the implementation of portfolio margining and cross-margining...
Accounting for Carbon Credits: Latest Developments
This paper updates and extends the analysis set out in ISDA’s October 2023 paper on accounting for carbon credits. While preserving the original focus on the accounting treatment of voluntary carbon credits (VCCs) and compliance carbon credits (CCCs), it expands...