The Committee on Payments and Market Infrastructures (“CPMI”) and IOSCO issued a report titled, “Recovery of Financial Market Infrastructures,” which provides guidance to financial market infrastructures, such as central counterparties, on how to develop plans to enable them to recover from threats to their viability and financial strength. The report additionally provides guidance to relevant authorities in carrying out their responsibilities associated with the development and implementation of recovery plans.
The report supplements the CPSS and IOSCO “Principles for Financial Market Infrastructures” published in April 2012, and is consistent with the “Key Attributes of Effective Resolution Regimes for Financial Institutions” of the Financial Stability Board.
Lofchie Comment: It’s becoming obvious that clearing corporations, which are the most important of the “financial market infrastructure” operations, are not magical amulets against systemic risk. Indeed, it is now abundantly clear that they create centralized risks that are not readily understood and for which the regulators are not fully prepared. See, e.g., JPMorgan Issues Paper on Resolution Plan for Central Clearing Parties (October 6, 2014).