The Single Resolution Board (SRB) discussed with members of the banking industry its resolution approach to financial market infrastructures (FMIs)/CCPs

The event took place in Brussels on 30 January 2017. The EESC was represented by Antonio Garcia del Riego, rapporteur for the opinion on Recovery and resolution of central counterparties (CCPs). CCPs are becoming key players in financial activity since the agreement reached by the G20 in 2009 that they would be the clearing centres for the derivatives markets. This will entail a massive increase in volumes, taking into consideration that in just one product, like interest rate swaps, total trades are in the region of USD 250 trillion.

Today, the SRB is responsible for the resolution of banks in Europe. At a later stage, the SRB could also be put in charge of the resolution of CCPs. One of the recommendations in the EESC´s opinion is the establishment of a single resolution authority in Europe, along the lines of the SRB's role in relation to banks in Europe. Hence, the interest in  knowing the scope of their activities and future programme.

The discussion focussed on the need to assess the access path of banks and clearing members to CCPs, as the best way to ensure that critical functions are well maintained and performed in crisis situations. “Lack of access to CCPs/financial market infrastructures (FMIs) is an impediment to resolvability in resolution plans”. Major international standard setters, like the European Banking Authority (EBA) and the Financial Stability Board (FSB) recognise the importance of and the need to have sufficiently detailed recovery plans in which access to CCPs is properly detailed. And this not only for recovery and resolution plans for banks but also for CCPs. It is also recommended to perform tests in pilot institutions.

There are three pillars: managing the risk of losing access to CCPs, support for resolution actions and establishment of communication plans, not only to clearing members but also from clearing members to their clients.

The chair of the SRB, Elke König, referred to analysis of the recovery and resolution plan, that each institution must have, to be triggered “over a weekend” should the need arise – it is a yearly process that implies the active role of the institution, the supervisor and the resolution authority. “It is a process, not a product”.