The Committee on Payments and Markets Infrastructures ("CPMI") and IOSCO requested comments on guidance published in two collaborative reports. The guidance is intended to (i) enhance the resilience of central counterparties ("CCPs"), and (ii) outline the implementation of the Principles for Financial Market Infrastructures ("PFMIs") as they relate to financial risk management and recovery practices. In a separate request, the Financial Stability Board ("FSB") solicited comments on a discussion note concerning CCP resolution.

The first report examined the level of consistency in the outcomes of the implementation of the standards in the Principles for Financial Market Infrastructures ("PFMI") across ten representative CCPs. The report determined that the CCPs have made "important and meaningful progress in implementing arrangements consistent with the financial risk management and recovery standards of the PFMI." However, the report also identified some "gaps and shortcomings" in CCPs' implementation, particularly in the areas of recovery planning, and credit and liquidity risk management. In the report, CPMI and IOSCO noted that they intend to conduct a follow-up targeted review in 2017 of the CCPs' progress in addressing the most important issues identified in the current report.

In the second report, CPMI and IOSCO requested comments on proposed (and "more granular") guidance for CCPs' implementation of key parts of the PFMI. CPMI and IOSCO proposed guidance on the following aspects of a CCP's financial risk-management framework:

  • governance and disclosure relating to the CCP's risk-management framework;
  • credit and liquidity stress testing;
  • coverage of credit and liquidity resource requirements;
  • margin;
  • a CCP's contribution of its own financial resources to cover losses; and
  • recovery planning.

In its separate discussion note, the FSB requested comments on aspects of CCP resolution that are considered to be intrinsic to the design of effective resolution strategies.

In response to the two reports and discussion note, CFTC Chair Timothy Massad offered the Commission's support for the regulatory groups' efforts:

As I have noted before, clearinghouse resiliency, as well as recovery and resolution planning, are high priorities for the CFTC. In addition to helping lead or participating in these international workstreams, we have been very busy on these issues at home.

Two of the largest trade groups in the cleared derivatives space, ISDA and the FIA, applauded an international emphasis on the issue of CCP resolution, and noted previous recommendations that the regulatory groups had made on these very issues.

Comments on the CPMI-IOSCO reports must be submitted by October 18, 2016. Comments on the FSB's discussion note must be submitted by October 17, 2016.

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