CPMI-IOSCO release draft guidance for supervisory stress testing of central counterparties
On June 28, the Committee on Payments and Market Infrastructure and the International Organization of Securities Commissions released for public comment a framework to help regulators design and run supervisory stress tests for central counterparties. The draft guidance, which is part of the "joint workplan" initiated in April 2015 to coordinate international policy on CCPs, provides a framework for authorities to evaluate how a common stress event might affect multiple CCPs. CPMI and IOSCO said conducting stress tests of this type could help authorities better understand the interdependencies between CCPs and markets and other entities, such as liquidity providers and custodians, as well as the macroeconomic impact of a stress event that affects multiple CCPs.
"This framework will enable authorities to better understand the magnitude of the interdependencies between CCPs and other entities, and the impact that a stress event affecting various CCPs could have on the wider economy," said Ashley Alder, chairman of the IOSCO Board. "The framework is also flexible enough to allow authorities to design a stress test that is best suited to their circumstances."
The consultative report was drafted by a working group of officials from central banks and market regulators led by two co-chairs: Daniela Russo of the European Central Bank and Robert Wasserman of the Commodity Futures Trading Commission.
