FSB’s Domanski cool on bail-in debt for clearing houses
Global standard-setter says all clearing participants must be incentivised to manage risk
Having pushed central clearing as a way to tackle systemic risk, regulators are now grappling with how to maintain the safety of the clearing houses themselves. A discussion paper released by the Financial Stability Board in November 2018 on the orderly resolution of central counterparties (CCPs) included some fairly radical suggestions, such as exchanging money owed to clearing members for equity in the CCP as a way to recapitalise it.
Unsurprisingly, this triggered a lively debate among CCPs
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