Financial Stability Board Issues Final Guidance on Financial Resources for CCP Resolution

The Financial Stability Board has issued a final report and guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution. The FSB consulted on the guidance in 2018, stating that, in its view, further evidenced-based guidance was needed to develop the guidance, such as the practical experience of resolution planning that resolution authorities and Crisis Management Groups have gained.

The guidance should be read alongside the FSB key attributes of effective resolution regimes for financial institutions, in particular the FMI Annex, and the 2017 FSB Guidance on CCP resolution and resolution planning. The final guidance covers:

• Assessing the adequacy of financial resources to absorb losses and cover other costs in resolution, which involves these steps:
  • identifying hypothetical default and non-default loss scenarios (and a combination of them) that may lead to resolution;
  • conducting a qualitative and quantitative evaluation of existing resources and tools available in resolution;
  • assessing potential resolution costs;
  • comparing existing resources and tools to resolution costs and identifying any gaps; and
  • evaluating the availability, costs and benefits of potential means of addressing any identified gaps.
• Approaches to the treatment of CCP equity in resolution, which involves:
  • an assessment of the impact that any limits on the amount of CCP equity exposed to losses has on a resolution authority's ability to take appropriate action to achieve the treatment of CCP equity as set out in the FSB's Key Attributes;
  • the incorporation in the resolution strategy of possible mechanisms for adjusting the exposure of CCP equity to losses in resolution; and
  • implementing policy for the treatment of CCP equity in resolution.

View the FSB's final report.

View details of the FSB's consultation on the guidance.

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