The European Association of CCP Clearing Houses (EACH) published its response to the CPMI-IOSCO consultation on further guidance to the PFMI for financial market infrastructures’ management of general business risks and general business losses, supporting greater consistency around Principle 15 but arguing the guidance should not evolve into explicit new standards or be treated as hard quantitative requirements by supervisors. EACH also flags that aspects of the draft appear inconsistent with existing European requirements and could disrupt established CCP practices. EACH argues European CCPs already manage non-default losses through requirements under the CCP Recovery and Resolution Regulation and EMIR capital rules, including the “second skin-in-the-game” layer of pre-funded own resources sized between 10% and 25% of a CCP’s EMIR capital requirement. It highlights existing risk mitigation approaches for key sources of business risk, including third-party service providers, IT and cyber failures, fraud, and legal claims, alongside governance and transparency mechanisms such as EMIR Risk Committees, rulebook consultations, exchanges with competent authorities, and existing disclosures. On the consultation’s proposals for determining minimum LNAFE, EACH points to three potential conflicts with EU rules: interaction with existing capital held against non-default risks versus a single-largest-scenario focus, the EU expectation in practice to hold at least 110% of capital requirements under RTS 152/2013 versus the draft’s “should consider” framing, and EMIR’s “recovery or orderly wind-down” capital standard versus a cumulative expectation to fund both recovery and wind-down plans. EACH also argues the six-month operating-expenses benchmark should be assessed case by case and may need to be adjusted upward under EU requirements based on CCP-specific factors.
European Association of CCP Clearing Houses 2026-02-06
European Association of CCP Clearing Houses warns CPMI-IOSCO PFMI guidance on general business risk could become de facto new quantitative standards
The European Association of CCP Clearing Houses (EACH) responded to the CPMI-IOSCO consultation on guidance for financial market infrastructures, advocating consistency with Principle 15 while cautioning against new standards conflicting with European regulations. EACH highlights existing EU frameworks for managing non-default losses and raises concerns about potential conflicts with EU rules on capital requirements and risk management practices.