Derivatives market reforms1 , including mandatory clearing and non-cleared derivative margin rules, have significantly increased the volume of transactions cleared by central counterparties (CCPs). While this has reduced risk in the financial system through netting and collateralization, credit and operational risks have become increasingly concentrated in a small number of large, globally interconnected CCPs, creating a new central point of potential systemic failure.
Much progress has been made since the publication of our 2014 white paper “What Is the Resolution Plan for CCPs?” Regulators, with input from CCPs, their members and other market participants, have worked together to develop and strengthen a global framework and limit the potential for future pro-cyclical or destabilizing behavior. As this work continues, we believe there are still areas that require additional analysis and action to ensure a continuum of capital and financial resources across CCP resilience, recovery and resolution.
