On 19 June 2026, the Bank of England (BoE) published a report setting out its findings and observations from the 2025 central counterparties (CCP) Global Default Simulation (CIDS) exercise and identified areas for consideration in the development of CCPs’ default management processes and future exercises.

Background

In November 2025, 38 CCPs around the globe, together with many of their members, conducted a simultaneous default management exercise involving the simulation of the default of a hypothetical common clearing member.

Summary

The report summarises the 2025 CIDS exercise and sets out feedback from participating clearing members and clients, alongside observations and recommendations. In particular, it identifies areas where the BoE and other relevant international authorities would expect to see further progress, including on the following priorities:

  1. The exercise found continued variation in procedures and communication conventions, which presents challenges for clearing members and may inhibit CCPs’ ability to achieve optimal auction outcomes, potentially at hidden financial cost.
    1. As a result, the report asks for industry led progress in this area, for example through the development of a voluntary auction file standard that could be offered alongside proprietary tools, and greater use of portal-based solutions, with less reliance on email processes.
    2. The report also suggests that regulators support further coordination on this issue, including with relevant industry groups.
  1. The report suggests that there should be more realistic testing of porting in future iterations of the CIDS exercise, which would hopefully ensure that the exercise remains proportionate and aligned with what might realistically occur in a live default scenario.
    1. Relatedly, future exercises will consider the need to provide more explicit guidance for CCPs and members.
    2. In addition, future exercises may include an additional voluntary “market stress overlay” module, under which CCPs could request stressed bids based on a coherent, cross-CCP macro stress scenario, whilst continuing to apply CCP-specific risk frameworks. CCPs could then subsequently analyse auction performance and loss allocation beyond the default fund, under conditions of heightened market volatility. This would support CCPs and their members in more fully testing operational capacity and constraints under conditions in stressed but plausible conditions.

Next steps

The next CIDS fire drill exercise is expected to occur in 2027, and the BoE set out that in the meantime it looks forward to continuing to work closely with fellow regulators, CCPs, clearing member firms.