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ISDA proposes CCP recovery and continuity framework 

January 27, 2015

Automated Trader 

The International Swaps and Derivatives Association (ISDA) has announced the publication of a new position paper that sets out a proposed recovery and continuity framework for central counterparties (CCPs).

Clearing houses have become vital to derivatives market infrastructure following the implementation of new regulations that require standardized over-the-counter derivatives to be cleared. As a result of their systemic importance, CCPs are required to develop recovery plans to avert a threat to their viability and ensure they can maintain the continuity of critical services without requiring the intervention of resolution authorities or resorting to public money.

The ISDA CCP Default Management, Recovery and Continuity paper proposes a framework for recovery and sets out tools that can be used to re-establish a matched book following the default of one or more clearing members. The paper does not cover non-default losses and those relating to liquidity shortfalls.

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