To open what I hope will be a day of thoughtful and lively discussion, I would like to share a few thoughts on today’s three topics, in my capacity as both member of the ECB’s Executive Board and Chair of the Committee on Payments and Market Infrastructures (CPMI). Global CCPs require enhanced cooperative oversight across borders Let me begin with the challenges we face in regulating and overseeing global cross-border clearing activities. As the clearing landscape evolved after the crisis, some derivatives markets became highly concentrated. Major markets are now cleared through a few global CCPs, which, as a result, have become systemically important for multiple jurisdictions besides the one in which they are headquartered.2 If not managed appropriately, risks channelled through these CCPs could spread rapidly across borders with potentially destabilising effects for financial markets more widely. For example, for many EU CCPs, including the most important clearing hubs, over two-thirds of the derivatives transactions they clear are submitted by financial institutions incorporated outside the CCP’s home Member State. Credit risks and potential losses are thus borne mainly by financial institutions in other EU or non-EU countries, and –once bank shareholders and creditors have been bailed in – taxpayers in those countries may ultimately have to foot the remaining bill. For this reason, market authorities, prudential supervisors and central banks have a keen interest in other countries complying with the highest financial and operational CCP risk management standards. They rely on home authorities to carry out prudent due diligence.

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.