The Financial Stability Board (FSB), the Committee on Payments and Market Infrastructures (CPMI), the International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS) today published the second report that maps interdependencies between central counterparties (CCPs) and their clearing members and other financial service providers. The international standard-setters published the first report on central clearing interdependencies in July 2017.
CCPs are an increasingly important part of the financial system, particularly following the post-crisis reforms that mandated central clearing of standardised over-the-counter (OTC) derivatives. CCPs should be subject to strong regulatory, supervisory and oversight requirements to fully realise the financial stability benefits they offer. Analysing the network of relationships is a useful starting point for understanding potential sources of systemic risk in central clearing.
To assess whether the findings of the July 2017 report (based on data as of September 2016) were stable over time, the international standard-setters conducted another more streamlined data collection (as of October 2017) from the same 26 CCPs. The results are broadly consistent with the previous analysis and show that:
There are, however, some changes to highlight in the interdependencies in central clearing. For instance, the concentration of client clearing activity has decreased. Initial margins from clients are now concentrated in two CCPs, compared to only one with the previous report using data as of September 2016.
The analysis of interdependencies in central clearing is intended to provide useful inputs for designing supervisory stress tests and has informed the policy work as set out in the joint workplan to promote CCP resilience, recovery and resolvability. The standard-setters published a report on the implementation of the workplan in July 2017.
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