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ARTICLE · 11 FEBRUARY 2013

Avoiding Armageddon: Resolution Regimes For Central Clearing Counterparties

Morrison Foerster
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A discussion on the final version of the principles for financial market infrastructures, as well as their proposed disclosure framework.

United StatesFinance and Banking
Peter Green
Peter Green
Jeremy Jennings-Mares
Jeremy Jennings-Mares
Dwight Smith III
Dwight Smith III
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The September 2009 resolutions of the G20 nations at their Pittsburgh summit, as to the compulsory centralised clearing of standardised over-the-counter (OTC) derivatives, paved the way for the creation of some of the biggest too-big-to-fail institutions the financial system has ever contained. Central clearing of securities and financial contracts is nothing new, but this corralling of OTC derivatives gives central clearing counterparties (CCPs) a new prominence and the resulting concentration of counterparty risk has necessitated new, more robust prudential requirements for CCPs.

As a result, in April 2012, the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) published the final version of their principles for financial market infrastructures (FMIs)1, as well as their proposed disclosure framework and assessment methodology in December 20122. These principles cover

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