January 23, 2022

Volume XII, Number 23

Advertisement
Advertisement

January 21, 2022

Subscribe to Latest Legal News and Analysis

January 20, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

CPMI and IOSCO Request Feedback on Access to Central Clearing and Portability

The Committee on Payments and Market Infrastructures and IOSCO issued a joint consultative report and requested comments on new client clearing access models and portability.

In their report, CPMI and IOSCO highlight current developments in the client clearing of derivatives and analyze to what extent concentration ("in a relatively small number of bank-affiliated clearing firms") creates concerns for client access. CPMI and IOSCO describe new models of client clearing, such as "sponsored" access, and developments in the ability of clients to "port" positions (including in default scenarios). Two identified practices that support successful porting in the event of default include (1) preemptively identifying potential alternate clearing firms and (2) the use of account structures that facilitate fully margined client positions. CPMI and IOSCO propose (i) other effective practices concerning three key elements (communication, coordination and harmonization), (ii) considerations for central clearing parties when developing a porting protocol and (iii) industry next steps.

CPMI and IOSCO seek feedback on:

  • access to client clearing:

    • the design of, barriers to, challenges concerning, and testing of direct and sponsored access models; and

  • portability in the event of default:

    • risks from not porting,

    • communication, coordination and harmonization integrated into effective practices,

    • issues when developing a porting protocol, and

    • suggested next steps.

Comments must be received by January 24, 2022.

Commentary

 

Title VII of Dodd-Frank and similar regimes across the world (for better or for worse) placed significant importance on central clearing of derivatives. Given these government-imposed mandates to clear, governments should also seek to make clearing efficient, cost-effective and appealing to market participants who seek to transact in these instruments.

Primary Sources

  1. CPMI and IOSCO: A Discussion Paper on Client Clearing - Access and Portability

  2. CPMI and IOSCO Press Release: Call for Comments on Access to Central Clearing and Portability

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 335
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Nihal S. Patel, Financial Services attorney, Cadwalader law firm
Associate

Nihal Patel is an associate in the firm’s Financial Services Group. He counsels both financial institutions and “buy-side” market participants on a variety of regulatory and compliance issues relating to securities and derivatives trading. This includes, inter alia, advice as to numerous aspects of broker-dealer regulation and swap regulatory issues arising under Title VII of the Dodd-Frank Act. 

He also has substantial experience in drafting and negotiating prime brokerage, derivatives, and other trading and financing documentation. ...

212 504 5645
Advertisement
Advertisement
Advertisement