FIA has responded to a consultation by the Committee on Payments and Market Infrastructures (CPMI), and the International Organization of Securities Commissions (IOSCO) on client clearing access and portability of positions in the event of a default.
Central counterparties (CCPs) are critical inter-connectors in the financial system, and FIA feels strongly that client access to these CCPs is the cornerstone of a resilient global derivatives markets. Among its comments, FIA noted two particular areas of interest to its members and to regulators: the adverse impact of current capital rules, and suggestions to assist portability of positions in the event of default.
FIA said that “regulatory capital remains a primary driver” of challenges to expanding client clearing access. “Capital rules are sometimes broadly applied without enough consideration about the impact to clearing, a risk-management function for the financial industry,” FIA wrote.
In regards to the portability of positions, FIA recommended three practical measures that could improve the process: 1) harmonization of data formats and fields; 2) use of LEIs or universally understood client identifiers; and 3) common milestones/timeframes for porting across CCPs.
