Five major clearing houses have passed the first US stress tests for multiple central counterparties (CCPs), as the derivatives watchdog looks to allay fears of potential systemic risk.
The Commodity Futures Trading Commission (CFTC) published the results of its first stress tests on Wednesday, with CME Clearing, ICE Clear Credit, Ice Clear Europe, ICE Clear US, and LCH given the pass.
“These first tests show that clearinghouses had ample resources to withstand extremely stressful market scenarios on the test date,” said CFTC chair Timothy Massad.
“They also show that risk was diversified across clearing members — a loss at one clearinghouse does not mean losses at all. These are very important findings in measuring the strength and resilience of clearinghouses.”
The analysis of each clearing house involved their largest clearing members, with both futures and swaps accounts of the clearing members tested.
Since the onset of mandatory clearing of interest rate swaps, concerns have been raised of a potential systemic risk being shifting away from banks and to a handful of CCPs.
“They enable us to assess the impact of stressful conditions across these clearinghouses and across the largest clearing members, and I thank our staff for the countless hours of work that went into this first set of tests,” added Massad.