This week has seen the European Association of CCP Clearing Houses (EACH) issue no less than six reports in response to public consultations. Five of these were for ESMA consultations, with the sixth one addressed at BCBS-CPMI-IOSCO regarding a review of margining practices. Resolution plans and CCP failures are among the ESMA topics.
Let’s not overfocus on risks relating to cleared trades while the uncleared transactions stay largely in the dark. This seems to be one of the messages from EACH to committee collaboration BCBS-CPMI-IOSCO, in the consultation response on margining practices. The original consultation report features a full 42 charts on cleared-space data but only 6 on the uncleared space, EACH notes. It ought to be possible to get a clearer view of the uncleared business by asking trade repositories for data, EACH suggests.
The five consultation responses sent to the European Securities and Markets Authority (ESMA) cover the topics of …
• the application of the circumstances under which a CCP is deemed to be failing or likely to fail (link),
• the content of CCP resolution plans (link),
• highly liquid financial instruments with regards to the investment policy of central counterparties (link),
• the methodology for assessing the value of the assets and liabilities of a CCP (link), and
• the methodology to value each contract prior to termination (link).
The BCBS-CPMI-IOSCO abbreviation stands for the collaboration between the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).