Enhancing central counterparty supervision and regulation The decision to require central clearing of standardized derivatives as a foundation for reform has raised the stakes for CCPs, clearing members, regulators, and the general public. At the international level, financial regulatory authorities addressed this challenge by updating, harmonizing, and strengthening the minimum risk management standards applied to financial market infrastructures, including CCPs.
The new Principles for Financial Market Infrastructures, commonly referred to as the PFMIs, set a higher bar for risk management to strengthen these core market infrastructures and promote financial stability.6 Just last week, the CFTC finalized its adoption of the PFMIs for the derivatives clearing organizations it regulates and supervises.7 The PFMIs require that a CCP develop strategies to cover its losses and continue operating in a time of widespread financial stress.