The FSB has taken the unusual route of issuing a “discussion note” – essentially a concept release – outlining considerations for CCP resolvability. Although the FSB in fact issued formal CCP standards in connection with overall ones for financial-market utilities (FMUs) in 2014, concern has since grown about the extent to which CCPs have become potential focal points for systemic operational, liquidity, and counterparty risk. Indeed, the FSB suggests that CCPs now pose the type of TBTF risk the G20 heads of state sought to cure when they first pressed for central clearing in 2009. To address this, they have instituted a work program to ensure that CCPs can either recover under stress without interruption to critical services or be closed without similarly dangerous systemic consequences.This discussion note is part of this work program, laying out preliminary thinking about questions such as how CCPs could be freed of moral hazard, whether risks would run to clearing participants and if so how, and the way regulators could ensure that critical services continue unabated in recovery or resolution.
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