On November 17, ISDA and FIA submitted a joint response to the Bank of England’s (BoE) consultation on the power to restrict central counterparty (CCP) discretionary payments. In the response, the associations welcome the BoE’s proposed power to direct CCPs to temporarily restrict or prohibit discretionary payments to shareholders or employees of CCPs, defined under schedule 11, paragraph 13 of the Financial Services and Markets Act 2023.

The associations acknowledge that this new power is an important component within the BoE’s supervisory toolkit. This can serve to support a CCP’s financial resilience in times of stress, potentially helping to reduce the likelihood that a UK CCP would reach a point where it is failing or likely to fail, thereby safeguarding financial stability in the UK, as well as in third countries where clearing members are established.