London, 17 October 2016 – The World Federation of Exchanges ("WFE"), which represents more than 200 market infrastructure providers including exchanges and CCPs, today published its response to the Financial Stability Board's (FSB) discussion note on the Essential Aspects of CPP Resolution Planning.
A summary of the WFE response is as follows:
- The WFE considers recovery is almost always preferable to resolution, but we welcome well-designed international efforts to enhance and strengthen how CCPs would be resolved in the event of a systemic crisis, such as the simultaneous default of several large global banks.
- The WFE supports further initiatives which encourage better planning by resolution authorities, particularly when they encourage international cooperation between regulatory bodies.
- Any resolution framework or guidelines need to retain sufficient flexibility, however, to ensure the continued smooth operation of the wider market in the event of a resolution situation.
Within that context, the WFE notes that:
- It is not likely that one single resolution strategy will be effective for all potential scenarios.
- Recovery must be given every opportunity to succeed.
- There is no benefit to limiting the tools available to a CCP in managing its own recovery.
- Existing obligations and incentive structures need to remain appropriately balanced, in order to support the CCP function in either recovery or resolution situations.
- The ultimate cost to end-users needs to be considered.
Nandini Sukumar, CEO, WFE, said: "First and foremost, we consider a CCP-led recovery to be preferable for the broad market than resolution. However, we support a principles-based approach - rather than prescriptions - to CCP resolution planning, which would facilitate a more integrated financial system. This would enable regulators and FMIs to consider and respond appropriately to the unique nature of the local markets they operate in."
Click here to read the WFE response in full.
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About the World Federation of Exchanges (WFE):
Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 200 market infrastructure providers, including standalone CCPs that are not part of exchange groups.The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges.
The WFE's post-trade mandate is one of the four pillars of its work, and is led by its Post-Trade Working Group of technical experts from CCPs globally (the WFE's PTWG). The WFE fulfils its mandate through a combination of policy responses to global regulatory organisations such as IOSCO, BCBS and the Financial Stability Board, and through educational services to its members, many of whom come from smaller, emerging markets as well as the world's largest CCPs and exchanges. The WFE forges consensus globally among CCPs on issues that matter; provides significant post-trade educational services to members; and endeavours to improve systemic stability, integrity and quality. In addition, one of WFE's two annual conferences, the IOMA conference in Spring each year, is devoted to post-trade issues.
The WFE promotes the development of fair, efficient and transparent markets. It works with policy makers, regulators and standard-setters around the world to support the development of effective rules and standards for exchanges and market participants. For more information, please visit: www.world-exchanges.org
For more information, please contact:
Head of Communications, World Federation of Exchanges
Phone: +44 20 7151 4137