On 19 December 2024, the Bank of England (BoE) published certain papers regarding central counterparty (CCP) resolution.

Power to direct a CCP to address impediments to resolvability

Earlier this year the BoE issued a consultation paper describing its proposed approach to exercising its power to direct a CCP to address impediments to resolvability under paragraph 2, Schedule 11 to the Financial Services and Markets Act 2023 (FSMA 2023). The BoE has now published a Policy Statement setting out its responses to the feedback received to the consultation. It has also set out a Statement of Policy containing the BoE’s policy for exercising its power to direct a CCP to address impediments to the effective exercise of the stabilisation powers (i.e. to the resolvability of the CCP).

Statutory tear up in resolution

The BoE has published a Policy Statement which provides feedback on its earlier consultation setting out proposals on its approach to determining commercially reasonable payments to clearing members whose contracts are subject to a statutory tear up in resolution. The BoE has also published a Statement of Policy as required by Schedule 11 of the FSMA 2023.  The Statement of Policy sets out the BoE’s proposed approach to determining the commercially reasonable value of contracts subject to a statutory tear up in a CCP resolution. Section 2 sets out the background and context in which the statutory tear up stabilisation option may be used. Sections 3 to 5 outline the BoE’s proposed approach to determining a commercially reasonable valuation of contracts subject to a statutory tear up.