CCP recovery—not too big to fail

CCP recovery—not too big to fail

How would the creation of a recovery framework for central counterparty clearing houses (CCPs) achieve greater transparency and financial stability? Farid Anvari, Of Counsel at Baker & McKenzie, comments on proposals for loss distribution and recovery of a CCP after it has suffered member-default losses.

Original news

ISDA proposes new recovery framework for defaulting CCPs

A CCP Default Management, Recovery and Continuity paper proposes a framework for central counterparty clearing houses’ (CCPs) recovery and sets out the tools that can be used to re-establish a matched book following the default of one or more clearing members. Produced by the International Swaps and Derivatives Associations (ISDA), the paper outlines measures that are consistent with the recommendations made by the Committee on Payments and Market Infrastructures and the International Organisation of Securities Commission in October 2014.

Why is there a perceived need for a recovery and continuity framework for CCPs?

The systemically important nature of several CCPs, along with the very large losses which CCPs can suffer relative to their capital, necessitates a formal framework for CCP recovery—particularly if taxpayers are not to bear a heavy burden for bailing them out. Ultimately, CCPs are essential to wholesale financial markets so a framework for dealing with CCPs which are at risk of failure and ensuring continuity of that CCPs’ services to the market would significantly improve financial stability.

What does the paper cover?

ISDA has put forward a set of proposals for loss distributi

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.