EACH, the European Association of Central Counterparty Clearing Houses, publishedits “Best Practices for CCP Stress Testing”, according to the press-release issued by the Association on Tuesday.
The document says “Global regulators led by CPSS-IOSCO and the European authorities have rightly focused on this essential element of a CCP’s risk management which provides the necessary assurance that CCPs are robust enough to withstand major market shocks. A CCP’s stress-testing regime must fully recognise the unique status of CCPs as market infrastructure dedicated to risk management and subject to specific regulatory requirements. The document, prepared by the EACH Risk Committee, describes the purpose of a CCP’s stress-testing, the kinds of scenarios that should be covered by the stress tests, actions to be considered based on results, participant involvement and related matters”, The “Best Practices for CCP Stress Testing” document read here.
EACH was established in 1991. Membership is open to all entities incorporated in Europeand supervised as a central counterparty. It currently has twenty-three members.Its aims are to discuss and analyse techniques and developments in central counterpartyclearing operations, systems, position-keeping, risk management tools (initial margining, revaluation, membership requirements, default procedures and resources, money settlementarrangements, etc.) and legal and regulatory issues related to central counterparty clearing;to develop, as appropriate, frames of references of central counterparty clearing and riskmanagement, and to publish those standards; to develop, with appropriate co-ordination (forexample, with other associations such as ECSDA and FESE), positions on proposedEuropean and global regulatory initiatives relative to central counterparty clearing; to providea forum for the development of the personal contacts necessary to ensure the exchange ofrisk-related information in times of potential difficulty; to monitor developments in payments, settlement and custody, as they have a bearing on central counterparty clearing, ensuringas appropriate a constructive working relationship with other infrastructure and userassociations; and to influence policymakers and be the central counterparties´ voice inEurope, and the voice of European central counterparties globally ensuring as appropriate aconstructive working relationship with supra-national European and global public authoritiesand global associations of central counterparty clearing houses.
