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Hamilton, Bermuda: 13 August 2019— In a press release today The World Federation of Exchanges has today announced that it has responded to the Committee on Payments and Market Infrastructures (CPMI) & International Organization of Securities Commissions (IOSCO.The release stated:




London, Tuesday 13 August 2019 – The World Federation of Exchanges ("WFE"), the global industry group for exchanges and CCPs, has responded to the Committee on Payments and Market Infrastructures (CPMI) & International Organization of Securities Commissions (IOSCO) discussion paper on central counterparty default management auctions.


The purpose of the discussion paper is to facilitate the sharing of existing practices on default management auctions, and to foster dialogue on the key concepts, processes and operational aspects used by CCPs in planning and executing default management auctions.


The CPMI-IOSCO paper sets a baseline of best practices, while recognising the importance of giving CCPs the ability to adapt practices to address the specific circumstances of a particular default. This is welcome, and a fitting complement to the CPMI-IOSCO Principles for Financial Market Infrastructures. Importantly, CPMI-IOSCO have acknowledged the importance of taking into account the product that is being cleared and the local (or, in many cases, cross-border) market.


The WFE response can be summarised as follows:


·         It is of crucial importance that default management auctions preserve an incentive structure which promotes CCP recovery over resolution, ensuring that all participants fully play their appropriate role in line with the interests of financial stability The WFE recommends that any guidance on default management auctions should not only be directed to CCPs, but also to the clearing members, and potentially clients, as their participation will effectively determine the success or failure of the auction.

·         The WFE believes that proposals around compensation following recovery/resolution, and/or overly large CCP skin-in-game contributions could reduce the likelihood of a successful auction outcome, and should be avoided. 

·         Addressing cross-CCP shocks such as clearing member or participant defaults is complicated, not least because CCPs operate worldwide from different time zones and are subject to local regulatory and bankruptcy regimes. This makes deference to home regulatory considerations essential with respect to cross-border supervisory planning and co-operation.

·         The board of the CCP cannot and should not abdicate accountability for the success or failure of default management, even when outsourcing some aspects to external parties, including clearing members. It is inappropriate for external parties (other than regulators) to have overriding decision-making powers concerning the conduct of default management processes.

·         The principle of independence is fundamental to a CCP being able to effectively manage stress events, and should not be impaired by the commercial interests of its clearing members.


Nandini Sukumar, Chief Executive Officer, WFE said: “The WFE is supportive of this paper, which aims to promote best practice by summarising relevant considerations. This is important, not least because the close collaboration between a CCP and its primary regulator should not be complicated by overly proscriptive default management auction frameworks at the international level. As the global body for CCPs, we recognise that deference to local regulation is essential to the successful functioning of default management processes.”


You can read the full WFE response here.


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About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE exchanges are home to nearly 48,000 listed companies, and the market capitalisation of these entities is over $70.2 trillion; around $95 trillion (EOB) in trading annually passes through the infrastructures WFE members safeguard (at end 2018).


The WFE is the definitive source for exchange-traded statistics, and publishes over 350 market data indicators.  Its free statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.  


With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.


For more information, please contact:


Anna Watson

Head of Communications, The World Federation of Exchanges 


Phone:   +44 20 7151 4137 / 7850 287 685

Twitter:   @TheWFE


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