INTERNATIONAL: IOSCO Publishes CCP Risk Analysis Findings

Friday May 4 2018

On 3^rd may 2018,  the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) published a report titled “Implementation monitoring of PFMI: follow-up Level 3 assessment of CCPs’ recovery planning, coverage of financial resources and liquidity stress testing.”

In this report IOSCO found that while participating CCPs have made progress in implementing arrangements consistent with the key international standards on financial risk management and recovery practices (the Principles for financial market infrastructures or PFMI), some CCPs are still failing to implement a number of measures in the areas of risk management and recovery planning.

The failure of these CCPs to implement practices constitutes, in certain instances, serious issues of concern and warrants immediate attention. The CPMI and IOSCO has encouraged the relevant CCPs to take action as a matter of priority. This latest analysis assessed the effectiveness of 19 CCPs across 17 jurisdictions. Each of these CCPs provide clearing services to a broad range of product classes, such as repo, bonds and equities, in addition to derivatives.

Some of the CCP’s asessed included the Depository Trust & Clearing Corporation – National Securities Clearing Corporation NSCC, EuroCCP and London Clearing House Limited.

IOSCO was concerned  that only one CCP of the seventeen CCPs currently rely on commercial settlement banks and/or nostro agents to collect and disburse settlement payments. Furthermore IOSCO found that twelve of the fifteen CCPs surveyed, rely on their clearing members as liquidity providers.

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