On 19 May 2026, the Bank of England (BoE) issued a discussion paper on central counterparty (CCP) resolution execution and resolvability outcomes.

Background

The BoE is the resolution authority for UK CCPs and has responsibility, alongside HM Treasury (HMT), for exercising the powers conferred by the CCP resolution regime. This regime, which came into effect at the end of 2023, provides the BoE and HMT with tools and powers to resolve a CCP. The BoE develops resolution strategies and undertakes resolution planning for each CCP established in the UK.

Issues

The BoE reports that whilst developing resolution strategies certain issues have arisen that it needs to consider. In the discussion paper the BoE invites views on three specific resolution execution topics that have a bearing on CCP resolution strategies. The BoE also sets out and seeks views on its preliminary thinking on what it means for a CCP to be ‘resolvable’, which it refers to as ‘resolvability outcomes’.

CCP resolvability

The BoE’s policy development on CCP resolvability is ongoing and will be informed by further engagement with industry and other stakeholders. In the discussion paper the BoE identifies three draft ‘resolvability outcomes’ it feels are likely to be necessary for a CCP to achieve to be considered resolvable. These are:

  • Resolvability outcome 1: CCP ability to deploy recovery and resolution tools available to the BoE.  The CCP must have the operational, legal, governance and communications capabilities to promptly and accurately deploy the BoE’s CCP resolution tools or any remaining recovery tools still available in resolution, upon the BoE’s instruction.
  • Resolvability outcome 2: CCP ability to secure the continuity of critical clearing services. The CCP must be able to seamlessly continue to provide (operate and risk manage) its critical clearing services in the run up to resolution, during resolution and after resolution.
  • Resolvability outcome 3: CCP capacity to provide data, modelling and analytical capabilities. The CCP must have the operational capacity and legal ability to provide the BoE, HMT, and the independent valuer with timely access to adequate data, including confidential information, in a format and timeframe acceptable to the BoE, in order to inform and support the BoE’s analysis and decision-making in resolution. The CCP must also be able to support the production of modelled outputs, as required and specified by the BoE, to inform the BoE’s resolution decision-making.

Resolution execution topics

The first two resolution execution topics are relevant where a CCP fails due to a non-default loss event (for example, a crystallisation of operational, cyber or legal risk which results in the CCP incurring a loss that exceeds the CCP’s own resources):

  • Resolution powers and the creditor hierarchy: How the BoE should manage the complexity arising in the calculation and execution of a resolution cash call.
  • Returning value to CCP creditors: How to return value to CCP creditors that have recapitalised a CCP.

The other topic arises where one or more clearing member(s) default and the BoE is required to intervene in a default loss resolution:

  • Considerations in the execution of a statutory partial tear up: How the BoE should use its discretion when exercising its statutory tear up power in a default loss resolution, in order to return the CCP to a matched book.

Next steps

The deadline for commenting on the discussion paper is 4 September 2026.

The views will inform the BoE’s on-going policy consideration on implementation of the regime and the enhancement of its planning and preparation for use of its CCP resolution powers.