Trade bodies push greater transparency for clearing members

FIA, GFMA, IIF, ISDA and TCH have responded to recent CPMI-IOSCO guidance urging for greater transparency for clearing members.

Several trade associations have called upon regulatory bodies to provide greater transparency for clearing members.

The Futures Industry Association (FIA), the Global Financial Markets Association (GFMA) the Institute of International Finance (IIF), the International Swaps and Derivatives Association (ISDA) and the Clearing House (TCH) responded to a consultative report on the resilience and recovery of central counterparties (CCPs).

The International Organisation of Securities Commissions (IOSCO) and Committee on Payments and Market Infrastructure (CMPI) authored the report, which the trade bodies have largely supported.

However, they have urged CMPI-IOSCO to clarify or enhance its guidance to provide greater transparency for clearing members.

This includes greater transparency for triggers of intraday margin calls, risk issues like margin and stress test and coverage results.

“Sufficient transparency should be provided to clearing members in order to allow them to replicate accurately margin models and add-ons of the CCP,” the response said.

It added that current CPMI-IOSCO public quantitative disclosures are “insufficient to enable the level of due diligence required to be undertaken by participants to meet their own internal risk management standards.”

Walt Lukken, president and chief executive officer of the FIA, explained the trade associations appreciate that CPMI-IOSCO took a consultative and open approach to develop the guidance.

“Central counterparty clearing is critical to our financial system and now, more than ever, effective and transparent risk management, resiliency and recovery planning is critical to strong global markets,” he said.