BoE researchers flag potential flaws in CCP default funds

Paper proposes refinements to 'cover two' standard

The Bank of England

Research published on October 24 by the Bank of England (BoE) tests the defences of central counterparties (CCPs), finding they are robust but not impenetrable.

The financial stability paper asks whether the ‘cover two' standard for CCPs is enough to ensure their safety – finding it to be a "prudent" framework, but with some weaknesses.

Cover two states that systemically important CCPs must have sufficient resources to survive the failure of their two largest members, under "extreme but

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