The Financial Stability Board (“FSB”), the Basel Committee on Banking Supervision (“BCBS”), the Committee on Payments and Markets Infrastructures (“CPMI”) and IOSCO released the 2015 central counterparties (“CCPs”) workplan and a progress report detailing the agencies’ efforts to enhance the “resilience, recovery planning and resolvability” of CCPs. The workplan focuses on CCPs that are systemic across multiple jurisdictions.
Lofchie Comment: The plan, perhaps naturally enough, focuses on the financial soundness of, and resolution plans for, CCPs. However, this may miss the greater systemic risk: that the authority of the CCPs to call for unlimited margin from clearing participants drains liquidity from the markets, with the result that, in a market crisis, the CCPs are able to save themselves, but they pull others down.