The European Association of CCP Clearing Houses (EACH) has published its response to the Bank of England consultation on “Ensuring the resilience of CCPs”, broadly supporting the overall implementation approach but seeking material changes to proposed requirements on transparency, supervisory processes for model changes and the introduction of a second tranche of CCP own resources, or second skin in the game (SSITG). For the transparency package, EACH asks for at least an 18-month transition to adapt CCPs’ margin simulation tools. EACH argues that requiring ex ante notification of non-material model changes and a 10 business day waiting period would be disproportionate, particularly in stress, and recommends a more risk-based calibration of the proposed materiality thresholds, including excluding routine parameter recalibrations and retaining an expedited path for urgent risk-driven changes. On SSITG, it questions the evidence base and the Bank’s cost-benefit analysis, noting the Bank’s estimate of annual incremental opportunity costs of GBP 300,000 to GBP 1,227,500 appears understated, and maintains that existing “first” skin in the game already aligns incentives. If introduced, EACH proposes sizing SSITG between 10% and 25% of a CCP’s risk-weighted capital requirement and allowing use of capital held above minimum requirements. The response also cautions against transparency measures that could force disclosure of granular initial margin model details and enable replication, and stresses that CCPs lack contractual relationships with end clients, limiting what can be provided directly across the client chain. Further comments cover capital requirements, where EACH opposes applying bank-oriented credit and market risk methodologies and warns of increased divergence from EU rules for UK CCPs that are also EMIR Tier 2 third-country CCPs. It supports improving client porting outcomes but views mandatory porting without proactive client consent and linking default fund allocations to “portability” as impractical and potentially cost-increasing. EACH also calls for liquidity stress-testing metrics to apply only to material currencies, and suggests broadening investment and collateral options, including acceptance of uncollateralised bank guarantees (with strict risk controls) and technology-neutral treatment of tokenised financial instruments where they meet existing eligibility criteria.
European Association of CCP Clearing Houses 2025-11-18
European Association of CCP Clearing Houses urges Bank of England to recalibrate CCP resilience proposals on transparency, SSITG and model change approvals
The European Association of CCP Clearing Houses (EACH) responded to the Bank of England's consultation on CCP resilience, supporting the approach but seeking changes in transparency, supervisory processes, and the second tranche of CCP own resources. EACH recommends a risk-based calibration for model change notifications and questions the cost-benefit analysis of the second skin in the game (SSITG). It also opposes bank-oriented methodologies for capital requirements and suggests improvements in client porting and liquidity stress-testing metrics.