CFTC MRAC Approves CCP Risk Management Recommendations (With Delta Strategy Group Summary)

The CFTC Market Risk Advisory Committee ("MRAC") approved final recommendations by the Central Counterparty Risk Management Subcommittee ("CRM") on how central counterparties ("CCPs") can enhance their efforts to prepare for the default of significant clearing members ("CMs"). Specifically, the CRM addressed issues and made recommendations that relate to default management implementation, auction process and porting. The CRM Subcommittee's final recommendations were approved by the full MRAC Committee by a vote of 19 to zero, with one abstention.

In a prepared  statement, CFTC Chair Timothy Massad referred to a recent CFTC staff report, stating that the results of supervisory stress tests "show that clearinghouses had ample resources to withstand extremely stressful market scenarios on the test date." He concluded that the findings reveal that "risk was diversified across clearing members – a loss at one clearinghouse did not mean losses at all."