CCP default management can and should be enhanced Before concluding, let me say a quick word on today’s third topic, the complex challenges CCPs face in managing defaults.10 CPMI-IOSCO is currently working on default management auctions, which is very welcome as this area of CCP risk management could benefit from further convergence towards shared best practices.11 The recent default at Nasdaq Clearing has certainly focused the minds of policymakers on this issue. There is much ground to cover for CCPs to converge towards best practices, from setting the right incentives for auction participants to properly calibrating their financial resources to cover concentrated positions in thin or illiquid markets. I am sure this workstream will yield valuable conclusions for both regulators and the industry. Conclusion In sum, today’s conference shows that we are continuing to ensure that CCPs steadily become more resilient and sophisticated in their role as systemic risk managers and so can truly manage any situation. At times, this requires imagination to understand the interaction of participant behaviours, complex portfolios and stress scenarios, which is a prerequisite for setting the right incentives. It also requires humility to understand the limitations of this exercise and the need for fall-back plans. Extreme and unexpected events do happen and the very purpose of CCPs is to act as a circuit-breaker during crises. For CCPs to perform this role as adequately as possible, all relevant authorities, including central banks, need to pull on the same rope.

Cooperation has, in fact, always been the ECB’s preferred approach to the oversight of financial market infrastructures (FMIs). This cooperation should rely on two elements, as agreed at the international level: first, effective cooperative oversight arrangements and, second, crisis management groups to allow for mutual consultation in recovery and resolution planning. Unfortunately, for several global CCPs, these arrangements do not yet exist, or do not involve all relevant authorities, despite international commitments. These delays are a source of concern, not least as seven years have passed since the adoption of the PFMIs5, and almost five years since international standards were adopted for both the recovery6 and resolution7 of FMIs. I urge all parties involved to accelerate progress in this area. 2/5  BIS central bankers' speeches  The Eurosystem needs to be able to conduct effective oversight Cooperation is also indispensable for the second topic of today’s conference, namely CCP liquidity and the role of the central bank of issue. In Europe, cooperation ensures that the ECB and the Eurosystem can conduct effective oversight of euro-denominated clearing activities, wherever they may be established. In 2017 the ECB recommended an amendment to its Statute to clarify its competence over CCPs for the purpose of carrying out its monetary functions.8 The ensuing debate among legislators and policymakers in the EU and beyond was marred by some misunderstandings, however, which I would like to dispel today. As you all know, some central banks are CCP supervisors. The ECB is not, 9 and has no intention of becoming one.