On 5 June 2018, the Bank of England (BoE) published a speech by Sir John Cunliffe (Deputy Governor, Financial Stability, BoE) Central clearing and resolution – learning some of the lessons of Lehmans.
In his speech Sir John discusses the progress that has been made in the last few years to reform derivatives’ markets, how the concentration of counterparty risk in central counterparties (CCPs) is managed and explains why a resolution regime for CCPs is needed. In particular, he sets out why resolution for CCPs requires a very different approach to resolution for banks. He also reflects on the development of the UK’s bank resolution regime stating that the BoE intends to consult later this year on a reporting and assurance framework.
Additionally, Sir John mentions that the BoE envisages requiring major UK banks to conduct a self-assessment of their resolvability – measured against the policies and standards that have been developed nationally and internationally. The purpose of this would be to ensure that the banks have and are able to demonstrate the systems, documentation, assurance and controls necessary to support their resolvability.