The International Swaps and Derivatives Association has published a new position paper that sets out a proposed recovery and continuity framework for central counterparties.
The position paper, which comprises the elements below, proposes a framework for recovery and sets out tools that can be used to re-establish a matched book following the default of one or more clearing members. It does not cover non-default losses and those relating to liquidity shortfalls.
The position paper comprises the following elements:
- recovery measures;
- transparency and timing;
- appropriateness of utilising recovery measures beyond pre-funded resources;
- segregated clearing services;
- failure to re-establish a matched book;
- compensation for loss allocation; and
- condition for entry into resolution.
View ISDA Proposes CCP Recovery and Continuity Framework, 26 January 2015
