Interoperability
"CCPs will recognise the specific status of each other as CCPs and not as risk-taking intermediaries."
Choice
Equity market participants in Europe want to be able to choose their central counterparties (CCPs) and benefit from concentrating their clearing business. Such choice requires that participants’ chosen CCPs have access to multiple trading venues across Europe – which necessitates interoperability among multiple competing CCPs.
Risk
Interoperability creates inter-CCP exposure: each CCP becomes a counterparty to the other interoperating CCPs, and therefore needs additional financial resources to cover its exposure to the possible failure of any of the linked CCPs.
Regulators have raised concerns about inter-CCP credit exposures and have said they will review all existing and proposed interoperability arrangements to ensure participating CCPs have sufficient capital.
Our position
EuroCCP offers several recommendations for implementing interoperability safely, among them the adoption of a single standard Convention on Interoperability to be signed by all interoperating CCPs and the augmentation of CCPs' existing default funds.
To review EuroCCP’s ideas and suggestions, please consult the following resources:
- Article by Diana Chan, CEO, EuroCCP, "Interoperability: Is it worth the effort?" (pdf), published on www.gfsnews.com, May 2010
- Q&A on Interoperability
- EuroCCP White Paper, "Recommendations for Reducing Risks Among Interoperating CCPs" (pdf)
- EuroCCP Proposes European Convention on Interoperability
- EuroCCP Interoperability Overview (pdf)