Securities and Markets

Issue 1223 / 21 September 2023

Overview

  • Central counterparty resolution - FSB publishes consultation report

Financial Standards Board

Central counterparty resolution - FSB publishes consultation report - 19 September 2023

The Financial Standards Board (FSB) has published a consultation report on a proposed framework for financial resources and tools for the resolution of systemically important central counterparties (CCP).

The report follows the FSB’s analysis conducted after its March 2022 joint report with the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions on CCP financial resources for recovery and resolution. The FSB’s analysis examined financial resources and tools for resolution, including bail-in bonds, resolution funds, resolution-specific insurance and resolution-specific third-party contractual support.

The report presents the findings of this analysis and puts forward a framework that would act as a global standard for financial resources and tools for CCP resolution, and reflect the findings of the analysis. The findings include that:

  • resources and tools carry different strengths and weaknesses and may be more or less appropriate in specific resolution scenarios;

  • no resource or tool, by itself, would be able to satisfy all aspects of the resolution resource parameters without some negative effect on financial stability or other drawbacks;

  • resources and tools are likely to vary in their effect on financial stability; and

  • access by the resolution authority to a combination of complementary resources and tools may be advantageous in meeting the objective of achieving a successful resolution.

The proposed resources and tools in the report take into account these findings.

The FSB welcomes comments on the report up to 20 November 2023.

FSB report: Financial Resources and Tools for Central Counterparty Resolution Consultation report

Press release