The WFE warns that BoE proposed CCP rules risk harming UK competitiveness

 

PRESS RELEASE

The WFE warns that BoE proposed CCP rules risk harming UK competitiveness 

London, 18 November 2025 - The World Federation of Exchanges (WFE), the global industry association for exchange groups and central counterparties (CCPs), has cautioned the Bank of England that elements of its proposed reforms for UK CCPs risk diverging unnecessarily from international standards, creating operational and economic burdens without commensurate supervisory benefits.

Disproportionate margin modelling disclosure:

A key concern is the Bank’s proposal to require UK CCPs to disclose detailed information on their margin models to allow market participants to replicate them. This goes beyond international standards and would expose the proprietary methodologies and algorithms that CCPs have developed to maintain robust risk management practices. Such disclosure requirements would weaken the position of UK CCPs, disincentivise innovation in margin modelling, and reduce the UK’s attractiveness as a global clearing hub. We urge the Bank to adopt a more proportionate, internationally-consistent approach, such as high-level disclosures that meet transparency objectives without eroding IP protections.

Porting client accounts during default events:

Additionally, we advise that the Bank’s proposed framework to incentivise porting would have unintended consequences for many end-users. In particular, the proposals would have a significant impact on users of net omnibus account structures, wherein a large number of clients would all need to agree ex-ante to use the same backup clearing member. Without unanimous agreement, clients would face severe constraints during a default event, especially under stressed market conditions. We recommend allowing clients who are highly unlikely to port to opt out ex-ante and enable CCPs to support porting more effectively by sharing portfolio data with alternative clearing members and accept collateral directly during the porting period. We also oppose linking default fund requirements to the perceived portability of clients, as this would further penalise users of net omnibus accounts who may not be able to afford to move to a more-portable segregated account structure. 

Skin-in-the-game:

Finally, the WFE is concerned about the Bank’s proposal to mandate CCPs to hold an additional tranche of prefunded “second skin-in-the-game” (SSITG) resources - set at 25 percent of risk-weighted capital - despite no clear evidence that such a requirement is necessary for financial stability. This UK-only uplift would tie up capital and liquidity that could otherwise support productive economic activity. Linking SSITG to the size of the default fund would also misalign incentives by effectively making CCPs underwrite the risks brought by clearing members and end users, while operationally, the proposed one-month replenishment requirement is impractical during periods of stress. The WFE urges a more risk-sensitive, internationally aligned, evidence-based approach to resource calibration.

Nandini Sukumar, CEO of the World Federation of Exchanges, said, “Several elements of the Bank’s proposals fail to deliver intended improvements in financial stability. We encourage the Bank to work closely with industry to develop a framework that aligns with international standards and maintains appropriate incentives across the clearing ecosystem.”

Read the full consultation response here.

For more information, please contact:

Cally Billimore

Communications Manager

[email protected]

+44 7391 204 007

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 the providers of over 250 pieces of market infrastructure, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia Pacific, 43% in EMEA and 20% in the Americas region. The WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some USD 1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. The exchanges covered by WFE data are home to over 49,054 listed companies, and the market capitalization of these entities is over USD116.58tr; around USD155tr in trading annually passes through WFE members (at end-2024).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back 50 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

Twitter: @TheWFE

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