On 9 November 2023, HM Treasury (HMT) published Statutory Instrument (SI) No.1195: the Financial Services and Markets Act 2023 (Resolution of Central Counterparties (CCPs): Calculation of Maximum Amounts for Cash Calls and Use of Specified Funds) Regulations 2023, along with an explanatory memorandum.

The SI sets the maximum amounts of cash that may be specified in cash call instruments made by the Bank of England (BoE). The power to make cash call instruments is part of the BoE’s powers to stabilise a CCP in resolution, as provided for by Schedule 11 to the Financial Services and Markets Act 2023. Cash call instruments require clearing members of a CCP to pay an amount of cash specified in the instrument to the CCP, and so allow the BoE to generate additional loss absorbing capacity and replenish a CCP’s resources. By setting caps on the amount of cash that may be specified, this instrument is intended to give clearing members greater certainty regarding the maximum amount they may be required to contribute under the cash call power should a CCP be placed into resolution.

The SI also establishes the circumstances in which the BoE can require the CCP to use specified funds held by the CCP to meet obligations imposed upon a clearing member under a cash call instrument, where that clearing member has failed to meet its obligations under a cash call instrument.

The SI will come into force on 31 December 2023.