ISDA, the Futures Industry Association (FIA) and the Institute of International Finance (IIF) appreciate the opportunity to comment on the consultation paper “Financial resources to support CCP resolution and the treatment of CCP equity in resolution” and believe that the consultation paper is another welcome step towards developing CCP resolution regimes.
In our response, we make the following points:
Part I: Assessing the adequacy of financial resources to support CCP resolution
- The Associations support the five-step approach and more quantitative clarity
- The five-step process should be further developed into a CCP capital requirements framework
- The need for increased transparency and testing of the resolution plans
Part II: Treatment of CCP equity in resolution
- We welcome the focus of the consultation paper on ways to expose CCP equity in resolution.
- Equity should be fully loss bearing in line with corporate finance principles
- The NCWO counterfactual should be clarified
- Participants should be compensated for the use of recovery and resolution tools
- Clear distinction between recovery and resolution
- Resolution tools should not make the crisis worse
- Resources to cover losses should be different from those set aside for recapitalization
- Incentives need to be aligned
- CCPs should have more SITG in two tranches
The Associations will continue to work with the FSB as they develop their recommendations.
Documents (1) for ISDA, FIA and IIF Respond to FSB’s Consultation on CCP Resources in Resolution
Latest
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
A Positive Step to Improve the FRTB in the EU
As the Basel III capital reforms are finalized for implementation in key jurisdictions, ISDA is maintaining a laser focus on making sure the rules are robust and risk-appropriate. Simply put, if capital requirements are set disproportionately high, this will have...
Trading Book Capital: Scott O'Malia Remarks
Trading Book Capital: Policy Challenges for the EU 2024-2029 Mandate March 25, 2025 Welcoming Remarks Scott O’Malia ISDA Chief Executive Officer Good morning and welcome to ISDA’s trading book capital event. It’s great to be here in Brussels and...
Setting Out the Value Proposition of Derivatives
History enthusiasts may have heard of the Code of Hammurabi, an early legal text from ancient Mesopotamia, carved into a stone slab about 3,700 years ago. The code covers everything from property rights to divorce, but it also recognizes the...