Trade Groups Respond To FSB On CCP Resolution

ISDA, FIA and the Institute of International Finance (collectively, the "Associations") provided an "incentives analysis" concerning central counterparty ("CCP") resolution issues raised by the Financial Stability Board ("FSB") in a discussion paper. The FSB discussion paper lays out considerations for authorities with regard to whether existing financial resources and tools are sufficient to implement the resolution strategy for CCPs.

The analysis outlines incentives for CCPs, clearing members and their clients with respect to various tools and processes relating to CCP recovery and resolution. The Associations found, among other things, that:

• there was "strong support" from their memberships (on both the buy- and sell-side) for the view that initial margin haircutting and forced allocation raise "significant" market stability concerns;