The Committee on Payments and Market Infrastructures (CPMI) and the Board of the International Organization of Securities Commissions (IOSCO) published a report entitled Resilience and recovery of central counterparties (CCPs): Further guidance on the PFMI (Report), which seeks to clarify how CCPs should implement the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI). The PFMI strengthen the international standards for risk management for financial market infrastructures (FMI) and are designed to make FMI more resilient in financial crises.

The Report emphasized how CCPs have become components of the financial system as more jurisdictions introduce mandatory central clearing for standardized over-the-counter derivatives. To improve the resilience of CCPs, the Report outlined five key components of a CCP’s financial risk management: (1) governance; (2) stress testing for both credit and liquidity exposures; (3) coverage; (4) margin; and (5) a CCP’s contribution of its financial resources to losses. The Report is not intended to impose additional requirements on CCPs, rather, the guidance it provides is intended to be read in conjunction with the requirements set forth in the PFMI.

A copy of the Report is available here.