ESMA issues guidance on effective use of resolution tools in CCP crisis planning
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has today published a resolution briefing for Central Counterparties (CCPs). The briefing provides practical guidance to National Resolution Authorities (NRAs) on how to operationalise the write-down and conversion of instruments tool (WDCI).
Marking an important step in ESMA’s wider efforts to ensure that CCP resolution tools can be effectively applied in a crisis, the briefing supports NRAs in enhancing their preparedness for implementing a WDCI. By promoting consistent practices across jurisdictions, it fosters effective financial markets and financial stability, strategic priorities for ESMA.
Developed by ESMA's CCP Resolution Committee, the briefing provides a methodology for NRAs to consider when including WDCI in CCP resolution plans.
NRAs should define the relevant data to be collected by the CCPs, with a view to calibrate the resources available through a WDCI. In doing so, NRAs should take into account the impact on relevant stakeholders, such as clearing members, financial markets and financial market infrastructures. NRAs should ensure that processes are in place to implement WDCI effectively, including preparations for the subsequent reorganisation of the CCP following the WDCI has been applied. Following the previous briefings on CCP critical functions and resolution cash calls, this briefing contributes to building a single resolution rulebook with a clear focus on operationalisation of the tools available to NRAs.
Further information:
Tayfun Yilmaz
Communications Officer
press@esma.europa.eu