1. Infrastructure
  2. Clearing
  3. ISDA and FIA Respond to BoE’s Supervisory Stress Testing of CCPs Consultation

ISDA and FIA Respond to BoE’s Supervisory Stress Testing of CCPs Consultation

Infrastructure
Clearing January 4, 2022
< 1  min.read

In June 2021, the Bank of England (BoE) published a discussion paper on supervisory stress testing of central counterparties (CCPs). ISDA and the Futures Industry Association (FIA) responded to the consultation.

Overall, the associations agree with the presented approach. The points made in the consultation response include:

  • Given the huge effort to run supervisory stress tests (SSTs), the associations propose for global regulators to join forces and run joint SSTs;
  • The associations welcome the inclusion of operational scenarios, especially stressing of porting assumptions and propose to also include non-default losses as a result of defaults;
  • The associations propose to not only use plausible scenarios, but also include scenarios that probe recovery and resolution situations;
  • The associations propose to analyze contagion risk, for instance by linking the losses at CCPs to the available resourced of clearing members;
  • The associations propose additional disclosure, including some disclosure specific to each clearing member.

 

Tags:

, ,

Documents (1) for ISDA and FIA Respond to BoE’s Supervisory Stress Testing of CCPs Consultation

Latest

ISDA Publishes Updated ISDA SIMM Governance

ISDA has published an updated version of the ISDA SIMM® Governance Framework, which sets out the principles under which the ISDA Standard Initial Margin Model® operates and the process through which it will be reviewed and amended on a consistent...

ISDA Response to PRA IMA Consultation

On September 18, ISDA, the Association for Financial Markets in Europe, the Institute of International Finance and UK Finance submitted a joint response to the UK Prudential Regulation Authority consultation on adjustments to the internal model approach (IMA) for the...

Calibration Test – IQ September 2026

Calibrating capital requirements is a highly complex undertaking and getting it wrong can have serious consequences. Too much lenience might lead to banks holding insufficient capital to mitigate their risks. But excess conservatism can put balance sheets under strain, forcing...