BoE questions unfunded CCP default fund top-ups

Funds would have to be replenished during period of stress

The Bank of England
BoE official: will funds be topped up during crisis?

A senior official at the Bank of England has questioned whether clearing houses can rely on unfunded commitments from member firms in the event of one of them defaulting. So-called rights of assessment oblige members to replenish a central counterparty's (CCP) communal loss reserve – the default fund – if it is wiped out.

The question should be considered when reviewing the ways in which a CCP is able to recover from a severe loss, said Andrew Gracie, executive director in the resolution

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