EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 14 January  2020 
on the recovery and resolution of central counterparties  
(CON/20 20/3) 
 
Introduction and legal basis  
On 2 October 2019  the European Central Bank (ECB) received a request from the German Federal 
Ministr y of Finance  for an opinion on a draft law introducing dedicated rules for the recovery and 
resolution of central counterparties (CCPs) into the Law on  recovery and resolution  (hereinafter the ‘draft 
law’). 
The ECB’s competence to deliver an opinion is bas ed on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union ( TFEU ) and the third, fifth and sixth indents of Article 2(1) of Council 
Decision 98/415/EC1, as the draft law relates to  the Deutsche Bundesbank , payment and settlemen t 
systems , rules applicable to financial institutions insofar as they materially influence the stability of 
financial institutions and markets , and the specific tasks conferred upon the ECB concerning the 
prudential supervision of credit institutions under  Article  127(6)  TFEU . In accordance with the first 
sentence of Article  17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 The draft law’s main purpose is to create legal in struments relating to  CCPs established in 
Germany , in addition to the existing recovery and resolution instruments for CRR credit institutions2 
under the Law on recovery and resolution3, which implement s Directive 2014/59/EU of the 
                                                 
1 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provis ions (OJ L 189, 3.7.1998, p. 42).  
2 The German legal order distinguishes between two types of credit institutions. Pursuant to Section 1(1) of the 
Banking Act ( Kreditwesengesetz)  of 9 September 1998 (Bundesgesetzblatt I p. 2776, as amended by article 91 of  
the law from 20 November 2019, Bundesgesetzblatt I S.  1626), a credit institution  is an undertaking which conducts 
at least one of the banking businesses described in the second sentence of Section 1(1) of the Banking Act 
commercially or on a scale which requires commercially organised business operations. The bankin g businesses 
include deposit busine ss and credit business, as well as  specific securities -related activities such as pri ncipal broking 
services and safe custody business. An undertaking that ac ts a cen tral counterparty is also categorised  as a credit 
institution.  
 Pursuant to Section 1(3d) of the Banking Act, a CRR credit institution  is a credit institution that, in addition,  meets the 
narrower definition of a credit instituti on set out in  point  1 of Article 4(1)  of Regulation (EU) No 575/2013 of the 
European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and 
investment firms and amending Regulation (EU) No 648/2012 ( OJ L 176, 27.6.2013, p. 1 ). 
3  Gesetz zur Sanierung und Abwicklung von Instituten und Finanzgruppen  of 10  December 2014 (Bundesgesetzblatt I 
p. 2091) as amended by Article 8 (10) of the Law of 10 July 2019 (Bundesgesetzblatt I p. 1002)  Law on r ecovery and 
resolution.  
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2 European Parliament and of the Council4. The draft law constitutes a supplementary chapter 
dedicated to CCPs in  the Law on r ecovery and resolution. The provisions of the draft law apply to 
CCP s that are also CRR credit ins titution s within the meaning of European law , as well as t o CCPs 
defined and licensed as credit institutions according to national law.  For CCP s that do not hold a 
CRR credit institution licence , the Law on recovery and resolution , as supplemented by the draft 
law, will apply as if the CCP was a CRR credit instit ution.   
1.2 The Law on  recovery and resolution designates the Bundesanstalt für 
Finanzdienstleistungsaufsicht  (Federal Financial Supervisory Authority , hereinafter ‘ BaFin ’) as the 
national resolution authority.  BaFin is also t he national supervisory authority , insofar  as the ECB is 
not acting in its supervisory capacity in accordance with Council Regulation (EU) No 1024/20135.  
1.3 The Law on  recovery and resolution requires CRR credit institutions to draw up their own recovery 
plans6. The supervisory authority  may, however, in agreement with the Deutsche Bundesbank, 
decide to subject CRR credit institutions to simplified requirements or to exempt them from the 
obligation to draw up recovery plans altogether, subject to certain conditions relating to the 
institution ’s systemic relevance7. Recovery plan s are subject to review by the supervisory authority , 
which decides in agreement with the Deutsche Bundesbank on the ir suitability8. The Law on  
recovery and resolution  also provides that the resolution authority must , in consultation with the 
supervisory authority, draw up resolution plans for all CRR credit institutions . However, it may draw 
up simplified resolution plans for certain CRR credit institutions taking into account their degree of 
systemic relevance9. Finall y, the Law on  recovery and resolution sets out the conditions for the 
resolution of CRR credit institutions, allowing both the supervisory and the resolution authority, 
following mutual consultation, to determine whether an institution is failing or likely  to fail10. In this 
context , the Law on  recovery and resolution  confers wide -ranging resolution powers on the 
resolution authority and provides for resolution tools , in particular the sale of business tool, the 
bridge institution tool, the asset separation tool and the bail -in tool. However, the resolution 
authority may also take a ny other measures that are deemed necessary to achieve the resolution 
objectives11.  
1.4 The draft law supplements the Law on  recovery and resolution by introducing additional 
requireme nts for the design of recovery plans by CCPs12. It requires CCPs both to consider 
scenarios that may be of particular relevance for the critical function s of CCP s and to take 
                                                 
4  Directive 2014/5 9/EU of the European Parliament and the Council of 15 May 2014 establishing a framework for the 
recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and 
Directives 2001/24/EC, 2002/47/EC, 2004/25/EC , 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 
2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the 
Council (OJ L 173, 12.6.2014, p.  190).   
5  Council Regulation (EU) No  1024/2013 of 15  October 20 13 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions  (OJ L 287, 29.10.2013, p. 63 ). 
6  The recovery  planning is regulated in Chapter 1  of Part 2  of the Law on recovery a nd resolution.  
7  See Sections 19 and 20 of the Law on recovery and resolution.  
8  See Section 15 of the Law on recovery and resolution.  
9  See Chapter 1  of Part 3 of the Law on recovery and resolution.  
10  See Section 62(1)of the Law on recovery and resolu tion. 
11  See Chapter 2 of Part 4, of the Law on recovery and resolution.  
12  See Article 1  of the draft law, new Section 152b of the Law on recovery and resolution.  
ECB -PUBLIC  
3 adequate measures to address these scenarios. To this end CCP s must  ensure the effective 
implementation of the proposed measures, including  the adaptation of their clearing conditions.   
1.5 The draft law requires  the supervisory authority to assess  the proposed recovery p lans of CCPs13. 
If the supervisory authority concludes that the recove ry plan s do not meet the statutory 
requirements  or that there are potential barriers to their successful implementation , it may request  
that CCP s revise the ir recovery plan s. Should the CCP s not submit revised recovery plan s, or if the 
recovery plan s still do not meet the statutory requirements, the supervisory authority may , in 
addition to imposing  the measures  provided for under the Law on  recovery and resolution , require 
CCP s to amend their contractual arrangements as necessary.  
1.6 The draft law requires th e resolution authority to draw up resolution plan s for CCP s in consultation 
with the supervisory authority14. Resolution plan s must  in particular take into account , in addition to 
the existing statutory requirements , their impact on CCP s’ clearing members , on their clients  and 
on the financial systems in the relevant Member States  and in the Union as a whole . Resolution 
plans must be reviewed at least annually and whenever  certain  major events  arise . 
1.7 The draft law entitles the resolution authority , following  coordination with the supervisory authority 
and the Deutsche Bundesbank,  to require  in addition to the measures foreseen under the Law on 
recovery and resolution , a modification of CCP s to modify their  clearing conditions and contractual 
arrangements if the resolution authority concludes that there are significant  impediments  to the 
resolvability of CCP s15. In this regard t he draft law empower s the Federal Ministry of Finance to 
adopt an ordinance setting out detailed provisions on changes necessary to achi eve resolvability 
and appropriate amendments to the clearing conditions and contractual or other related 
arrangements of CCP s and the conditions under which such amendments may be ordered.  
1.8 Where the resolution conditions , as set out in the Law on  recovery and resolution16, are met, the 
resolution authority may take , in addition  to the measures stipulated in the Law on  recovery and 
resolution , all necessary measures to achieve the resolution objectives , in particular  it may : 
(a) terminate  contracts , whereby  the resolution authority may terminate  all or only specific 
obligations of a CCP  undergoing resolution ; (b) reduce the  profits to be paid to non -defaulting 
clearing members, and ( c) make additional cash calls17. However, b efore resorting to  these 
resolution tools, the resolution authority must first enforce the contractual rights of the  CCP.  Under 
certain conditions the resolution authority may also desist from asserting contractual rights in full or 
in part18. Furthermore, the resolution authority may not req uire an a dditional cash  call from the 
Deutsche Bundesbank or a reduction in the Deutsche Bundesbank’s valuation gains .19 
                                                 
13  See Article 1  of the draft law, new Sections 152c and 152d of the Law on recovery and resolution.  
14  See Article 1  of the draft law, new Section 152e of the Law on recovery and resolution . 
15  See Article 1  of the draft law , new Section 152f of the Law on recovery and resolution.  
16  See Section 62 of the Law on recovery and resolution.  
17  See A rticle 1  of the draft law,  new Section 152h of the Law on recovery and resolution.  
18  See Article 1 of the draft law, new Section 152h (2) and (3)  of the Law on recovery and resolution.  
19  See Article 1  of the draft law, new Section 152h (5) of the Law on recovery and resolution.  
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4 1.9 The draft law introduces safeguards and compensation rights for shareholders, creditors and 
clearing members whose losses in the resolut ion process exceed those in a presumed insolvency 
procedure (the ‘no  creditor  worse  off than in insolvency’ principle)20.  
1.10 According to the explanatory memorandum, the draft law will be replaced by a Union regulation 
once such regulation is adopted.  
1.11 The dra ft law also introduces amendments that need to be made to certain supervisory acts, in 
particular the Law on  securities trading21, in response to Regulation (EU) 2019/834  of the European 
Parliament and of the Council22. Finally , the draft law introduces seve ral editorial changes to a 
variety of supervisory acts and ordinances.  
 
2. General observations   
2.1 The ECB w elcomes the draft law’s general objective  of preserv ing financial stability  in the event of 
the distress or failure of a CCP . Due to their interconnecte dness and market importance, CCPs 
must generally be considered to be of  systemic  importance . The failure or distress of a CCP is 
likely to impair the proper functioning of the financial system , which also has negative 
consequences for the rest of the econo my. Minimising such contagion risks through robust CCP 
recovery and resolution arrangements is therefore critical.  
2.2 The ECB shares the Commission’s  view that a harmonised approach to the recovery and 
resolution of CCPs across the Union is appropriate23. In the event of the distress or failure of a 
CCP, divergent approaches to their recovery and resolution across the Member States could lead 
to the disruption of critical functions to clearing members and clients  across borders an d wider 
financial instability , especially since  cross -border membership of European  CCPs is widespread . A 
European approach is also warranted to ensure that the legitimate concerns of all affected Union 
stakeholders are duly considered in the context of CCP recovery and resolution plan ning and 
execution , as well as to ensure a level playing field among U nion CCPs . 
2.3 The draft law regulates aspects of the recovery and resolution of CCPs that are provided for in the 
Commission’s 2016 proposal for a regulation of the European Parliament and of the Council on a 
framework for the recovery and resolution of central counterparties and amending Regulation s 
(EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365  (hereinafter the ‘U nion CCP recovery 
and resolution proposal’) , on which the ECB opined  in 201724. It is understood that the Union’s 
CCP recovery and resolution proposal is currently under discussion in the European Parliament 
and the Council, and that the decision -making process may be finalised in 2020. In this context, it is 
                                                 
20  See Article 1  of the draft law, new Section 152m of the Law on recovery and resolution.  
21  Wertpapierhandelsgesetz of 9 September 1998 (Bundesgesetzblatt I p. 2708) as amended by Article 58 of the Law 
of 20 November  2019 (Bundesge setzblatt I p. 1626 ). 
22  See Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019 amending 
Regulation  (EU) No 648/2012 as regards the clearing obligation, the suspension of the clearing obligation, the 
reporting requirement s, the risk -mitigation techniques for OTC derivative contracts not cleared by a central 
counterparty, the registration and supervision of trade repositories and the requirements for trade repositories  (OJ 
L 141, 28.5.2019, p.  42). 
23  See paragraph s 2.1 and  2.2 of the Explanatory Memorandum to the proposal for a regulation of the European 
Parliament and of the Council on a framework for the recovery and resolution of central counterparties and 
amending Regulation s (EU) No 1095/2010, (EU) No 648/2012, and (EU ) 2015/2365 , COM(2016) 856 final . 
24  See Opinion CON/2017/38 . All ECB Opinions are published on the ECB’s website at www.ecb.europa.eu .  
ECB -PUBLIC  
5 underst ood tha t the German legislator will review the draft law once  the Union’s CCP recovery and 
resolution proposal is adopted, in order to ensure full consistency with Union le gislation . However, 
once  Union legislation  is adopted , the draft law will require additiona l adaptation , not just by the 
legislator but also on the part of  CCPs, their clearing members and clients .  
2.4 A national legislative proposal is subject to certain inherent restrictions  that a re not imposed on a  
proposal at Union  level. 
First, a  CCP may h old an authorisation as a CRR credit institut ion. The draft law has followed a 
consistent approach for the recovery and resolution of CCPs, irrespective of whether they are CRR 
credit institutions. However, t he compulsory rules governing the recovery and reso lution of CRR 
credit institut ions are laid down  in Directive 2014/59/EU and Regulation (EU) No 806/2014 of the 
European Parliament and of the Council25. A national legislative proposal ’s rules on the recovery 
and resolution of a CCP that is a CRR credit ins titution may further supplement Directive 
2014/59/EU and Regulation (EU) No 806/2014 , however, it  must not contradict the  Union legal 
requirements . This limitation do es not apply to CCPs that do not hold a n authorisation as a CRR 
credit institut ion. Establ ishing diverging recovery and resolution rules for CCPs depending on their 
status as a CRR credit institut ion could undermine the objective of preserving a Union  level playing 
field and, ultimately, financial stability.  
Second, u nder the U nion’s  CCP recov ery and resolution proposal resolution colleges are to  be 
established comprising  Member State  and Union  authorities . A national proposal is necessarily 
limited to imposing rules only on authorities within its jurisdiction  as it can only invite, but  cannot 
dictate the input of authorities in other Member States . The draft law is similarly incapable of 
introduc ing a horizontal coordination of recovery and resolution plans across Union CCPs.  
2.5 The draft law seeks synergies by building on the existing framework f or bank recovery and 
resolution, according to which resolution and supervisory authorities should be prepared for, and 
have adequate recovery and resolution tools at their disposal to handle , situations involving the 
failure of credit institutions. However , due to their di vergent  functions, organisational structures and 
business models, the risks inherent in banks and CCPs are different. Specific tools and powers are 
therefore needed for CCP failure scenarios caused either by the default of the CCP's cleari ng 
members or by other non -default -related  events. Therefore, a n approach that simply supplements  
the rules for bank recovery and resolution may sometimes fail to  respect the intricacies of a CCP 
recovery and resolution26. For example, t his shortcoming beco mes apparent in connection with the 
initiation of a resolution. Article 32(1) of Directive 2014/59/EU requires that a CRR credit institution 
is determined as failing or likely to fail before its resolution can be initiated. According to the 
                                                 
25  Regulation (EU) No 806/2014 of the European Parliament and of the Council o f 15 July 2014 establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a Single Resolution Mechanism and a Single Resolution Fund and amendin g Regulation (EU) No  1093/201 0 (OJ 
L 225, 30.7.2014, p. 1).  
26  In this context it is understood that in Germany there are two CCPs that have been authorised to offer services and 
activities in the Union in accordance with Regulation (EU) No 648/2012 of the European Parliament and of t he 
Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories ( OJ L 201, 27.7.2012, p.  1): 
(1) Eurex Clearing AG, which it is understood is supervised as a less significant CRR credit institution within the 
framework of the S ingle Supervisory Mechanism , and (2)  European Commodity Clearing, a non -CRR credit 
institution CCP supervised by BaFin. As a CRR credit institution, Eurex already falls under the scope of the Law on 
recovery and resolution. It is also understood that one of  Eurex’s clearing members is the Deutsche Bundesbank.  
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6 Union’s  CCP rec overy and resolution proposal27, a resolution authority may also initiate the 
resolution of a CCP irrespective of whether the CCP is failing or likely to fail if the CCP’s envisaged 
recovery measures could cause significant adverse effects for the financial  system.  
 
3. Specific observations  
It is recalled that the draft law would have to be reviewed once the U nion’s  CCP recovery and 
resolution proposal is adopted. The observations made in this opinion are therefore without 
prejudice to the need for the German l egislator to adapt the draft legislation to any future Union 
legislation.  
Against this background t he ECB acknowledges that the draft law has taken into account the 
Union’s  CCP recovery and resolution proposal , but notes that  there is still room for impro vement in 
the following areas . 
3.1 Recovery Planning  
3.1.1  Recovery plans should be required to envisage severe  scenarios, including the default of more 
than two clearing members  to which  a CCP  has its  largest exposure s, and both idiosyncratic and 
system -wide stress  scenarios, taking into account the potential impact of domestic and cross -
border contagion in crises, as well as simultaneous crises in several significant markets28. 
3.1.2  It would be useful  to clarify t hat BaFin’ s review , as supervisory authority,  must take pl ace not only 
in the context of the initial approval of the recovery plan, but also at a later stage, when BaFin 
conducts or updates its assessment of the CCP's resolvability. This is important because otherwise 
BaFin is likely only to conduct its resolutio n planning and resolvability assessments after the CCP ’s 
recovery plan has been finalised29. 
3.1.3  The draft law provides that CCPs may in principle benefit from the simplified procedure for 
design ing a recovery plan , as laid down for credit institutions30. Given the systemic nature of each 
CCP , the ECB expects that the requirements  that must be satisfied  for a simplified procedure for 
designing  recovery plan s to be applicable would not usually be fulfilled in the case of CCPs and 
that therefore, CCP recovery plans  should , in practice,  be excluded from such simplified 
procedures.  
3.2 Resolution Planning  
3.2.1  Resolution plans should clearly differentiate between potential stress scenarios that are related to a 
clearing member’s default and those that are due to other reasons . Similarly, in order to ensure that 
resolution plans are adequate for all relevant scenarios going beyond ‘extreme but plausible’ 
market conditions, the resolution plan should, in terms of default -related failure scenarios, take into 
consideration not only  the default of one or more of the CCP's clearing members, but also the 
default of at least the three clearing members to which the CCP has the largest exposures, 
                                                 
27  See Article 22 (3) of the U nion’s  CCP recovery and resolution proposal.  
28  See paragraph  2.3.1 of Opinion CON/2017/38.  
29  See paragraph 2.3.2 of Opinion CON/2017/38 . 
30  See Article 1  of the draft law , new Section 152b (1) in conjunction with new Section 152a (3) of the Law on recovery 
and resolution.  
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7 considering that CCPs are already required under Regulation (EU) No 648/2012 to hold sufficie nt 
financial resources to withstand the potential default of at least the two clearing members to which 
the CCP has the largest exposures31.  
3.2.2  The resolution plan should require that CCPs do not assume  extraordinary public financial support, 
central bank eme rgency liquidity assistance or central bank liquidity assistance provided under 
non-standard collateralisation,  tenor and interest terms32. Moreover , given the importance of pre -
empting potential taxpayer losses in resolution, the draft law  should also expr essly require BaFin , 
as resolution authority,  to make prudent assumptions about the financial resources that may be 
required to achieve resolution objectives and the resources that it expects to be available under the 
CCP's rules and arrangements at the ti me of entry into resolution33. 
3.2.3  In order to ensure better consistency between the key aspects of the resolution plan and 
international standards34, the following items should be added to the mini mum content of resolution 
plans35. 
First, a n estimation of the ti meframe for the replenishment of the financial resources of the CCP 
(i.e. default fund and regulatory capital).  
Second, a  description of the general approach and decision -making processes followed by BaFin , 
as resolution authority,  in key areas of resoluti on with the objective of fostering planning and 
stakeholder transparency around prospective resolution actions. This should include: (a) BaFin 's 
prospective approach for triggering resolution, including key indicators that would influence BaFin 's 
decision whether to put the CCP in resolution in different types of default and non -default related 
resolution scenarios; and (b) to the extent that BaFin  needs to depart from the CCP's rules and 
arrangements, the general approach that BaFin  would expect to follow in calculating and allocating 
losses, including the presumed choice and sequencing of different loss allocation tools, and how 
BaFin  would expect to apply the ‘no creditor worse off than in insolvency’ safeguard and assess 
losses under the counterfactual f or these purposes.  
Given the granular level of these requirements it may , however , be more appropriate to implement 
them via an announcement by BaFin , rather than  in the draft law itself.  
3.3 Resolvability  
BaFin , as resolution authority,  should be empower ed to require a CCP to set aside resources to 
increase its capacity for loss absorption, recapitalisation and the replenishment of pre -funded 
resources, should the available resolution funding be deemed insufficient. In order to give effect to 
this power, regul ations adopted by the Minist ry of Finance or BaFin under the draft law should, as 
regard s assessing  resolvability , specify minimum criteria to be considered by BaFin when 
assessing the adequacy of a CCP's resolution funding36. As a minimum BaFin should take  into 
account the following elements .  
                                                 
31  See paragraph  2.4.1  of Opinion CON/2017/38 . 
32  See Section 40 (2) of the Law on r ecovery and resolution . 
33  See paragraph  2.4.1  of Opinion CON/2017/38 . 
34  See section 7.5 (i) and (v) of the FSB's ‘Guidance on Central Counterparty Resolution and Resolution Planning’.  
35  See paragraph  2.4.1  of Opinion CON/2017/38.  
36  See paragraph 2.5.1 of Opinion CON/2017/38.  
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8 First, i n the event of default -related resolution scenarios: ( a) the risk characteristics, complexity and 
pricing uncertainties of the products cleared, and the related potential degree of error in initial and 
variati on margin calculations; ( b) the size, structure and liquidity of the underlying market in 
stressed conditions; ( c) the number of clearing member defaults that would be covered by available 
pre-funded and committed resources under ‘extreme but plausible’ co nditions; ( d) the availability 
and potential impact on affected clearing members of tools such as partial tear -ups and variation 
margin gains haircutting; and ( e) the credibility of unfunded arrangements in meeting the CCP's 
potential needs; and  
Second , and for all types of loss, the substitutability of the CCP in the markets it serves, and the 
credibility of any additional arrangements, such as insurance agreements or parental guarantees, 
that may be available to address uncovered credit losses.  
3.4 Resolutio n tools  
In order to pre -empt moral hazard and minimise potential taxpayer losses, the use of State aid for 
the purpose of CCP resolution should not only be subject to the condition of approval unde r the 
Union State aid framework37, but should also be depend ent on credible mechanisms for the timely 
and comprehensive recovery of any resources provided38.  
The ECB welcomes the exclus ion of  the Deutsche Bundesbank from certain CCP resolution tools , 
namely cash calls and the reduction in valuation gains39. This is in line with the ECB’s stance as 
expressed in its opinion on the U nion’s  CCP recovery and resolution proposal , which emphasised  
the special features of central banks as CCP clearing members40. The ECB  therefore recommend s 
that the other members of the E uropean System of Central Banks also be excluded from the 
operation of  the draft law.  
3.5 ‘No creditor worse off than in insolvency’ principle   
The ECB notes that the ‘no -creditor -worse -off-than-in-insolvency’ principle is a critical safeguard to 
ensure that CCP participants, shareholders and other creditors would not be treated less 
favourably in resolution than under the hypothetical alternative scenario where the resolution 
authority would not have intervened and the CCP would have been liquidated under applica ble 
insolvency law41.  
At the same time, it is important that the valuation methodology underlying the application of the 
no-creditor -worse -off principle properly reflects the fair value of business continuity preserved by 
CCP resolution in order to avoid e xcessive compensation claims by relevant stakeholders. The 
need for a fair and balanced approach in this respect is underlined by the related risks for the 
public sector, with the financial burden ultimately being borne by taxpayers. Taking proper account 
of the fair value of business continuity preserved by CCP resolution is an essential consideration in 
the context of CCP resolution, which would only be envisaged to take place in exceptionally severe 
market events, where the disruption of a CCP’s critical  functions would most likely be associated 
                                                 
37  See Section 103 (4) of the Law on recovery and resolution.  
38  See paragraph 2.6.3 of Opinion CON/2017/38.  
39 See Article 1 of the draft law, new Section 152h (5), of the Law on recovery and resolution.  
40 See paragraph 2.1.3 of Opinion CON/2017/38.  
41 See paragraph 2.7 of Opinion CON/2017/38.  
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9 with a large -scale destruction of financial value and very limited opportunities for bilateral clearing  
alternatives.  
The ECB therefore recommends that a fair valuation of the CCP for purposes of the application o f 
the no-creditor -worse -off principle would need to be not only carried out in terms of the assets and 
liabilities reflected on the CCP's balance sheet at the point in time when resolution is triggered, but 
would need to be based on a more comprehensive, r ealistic assessment of the CCP's value in the 
event of its liquidation, taking full account of losses, replacement costs, and the destruction of value 
that would result from the closure or liquidation of the CCP.  
 
This opinion will be published on the ECB’ s website.  
 
 
Done at Frankfurt am Main, 14  January 2020 . 
 
[signed]  
 
The President of the ECB  
Christine LAGARDE