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Recovery and Resolution of Central Counterparties

Author

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  • Matt Gibson

    (Reserve Bank of Australia)

Abstract

The increasing importance of central counterparties (CCPs) to financial stability has prompted regulators to take steps to ensure that critical CCP services can continue in circumstances of financial distress. These steps include ensuring that CCPs have robust plans for recovery to return them to viability, and that authorities have the ability to resolve a CCP if required. This article discusses the key components that are expected to form part of CCPs’ recovery plans, including the power of a CCP to apply ‘haircuts’ to variation margin payments. The article also notes the potential elements that may form part of a resolution regime for CCPs.

Suggested Citation

  • Matt Gibson, 2013. "Recovery and Resolution of Central Counterparties," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 39-48, December.
    • Handle: RePEc:rba:rbabul:dec2013-05
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2013/dec/pdf/bu-1213-5.pdf
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    References listed on IDEAS

    as
    1. Rehlon, Amandeep & Nixon, Dan, 2013. "Central counterparties: what are they, why do they matter and how does the Bank supervise them?," Bank of England Quarterly Bulletin, Bank of England, vol. 53(2), pages 147-156.
    2. Elliott, David, 2013. "Financial Stability Paper No 20: Central counterparty loss-allocation rules," Bank of England Financial Stability Papers 20, Bank of England.
    3. John P Jackson & Mark J Manning, 2007. "Comparing the pre-settlement risk implications of alternative clearing arrangements," Bank of England working papers 321, Bank of England.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Heath, Alexandra & Kelly, Gerard & Manning, Mark & Markose, Sheri & Shaghaghi, Ali Rais, 2016. "CCPs and network stability in OTC derivatives markets," Journal of Financial Stability, Elsevier, vol. 27(C), pages 217-233.
    2. Louise Carter & Megan Garner, 2015. "Skin in the Game – Central Counterparty Risk Controls and Incentives," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 79-88, June.
    3. Alexandra Heath & Gerard Kelly & Mark Manning, 2015. "Central Counterparty Loss Allocation and Transmission of Financial Stress," RBA Research Discussion Papers rdp2015-02, Reserve Bank of Australia.
    4. Mr. Manmohan Singh, 2014. "Limiting Taxpayer "Puts" - An Example from Central Counterparties," IMF Working Papers 2014/203, International Monetary Fund.
    5. Ashwin Clarke & Paul Ryan, 2014. "Non-dealer Clearing of Over-the-counter Derivatives," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 77-88, March.
    6. Rosati, Simonetta & Vacirca, Francesco, 2019. "Interdependencies in the euro area derivatives clearing network: a multi-layer network approach," Working Paper Series 2342, European Central Bank.
    7. James Hansen & Angus Moore, 2016. "The Efficiency of Central Clearing: A Segmented Markets Approach," RBA Research Discussion Papers rdp2016-07, Reserve Bank of Australia.
    8. Soledad Núñez & Eva Valdeolivas, 2019. "Central clearing counterparties: benefits, costs and risks," Revista de Estabilidad Financiera, Banco de España, issue Spring.
    9. Soledad Núñez & Eva Valdeolivas, 2019. "Central clearing counterparties: benefits, costs and risks," Financial Stability Review, Banco de España, issue Spring.
    10. Mr. Manmohan Singh & Dermot Turing, 2018. "Central Counterparties Resolution—An Unresolved Problem," IMF Working Papers 2018/065, International Monetary Fund.
    11. Soledad Núñez & Eva Valdeolivas, 2019. "Central clearing counterparties: benefits, costs and risks," Financial Stability Review, Banco de España, issue Spring.

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