Transparency data

Central Counterparty (CCP) Resolution Liaison Panel Minutes 2025

Published 26 March 2026

Meeting date: 29 September 2025, 15:00-16:00

Location: Virtual meeting (via MS Teams)

Attendees:

• HM Treasury (the Treasury): George Barnes (Chair), Henry Grigg, James Stillit, Naomi Lawrence, Precious Oladipo
• Bank of England: Nishi Shant, Ben Mitchell, Geoffrey Davies
• Financial Conduct Authority (FCA): Rob Mak
• Prudential Regulation Authority (PRA): Jonathan Sepanski
• Intercontinental Exchange (ICE) Clear Europe: Charles Lindsay
• LCH, LSEG: Owen Taylor
• London Metal Exchange (LME): Chris Jones
• International Swaps and Derivatives Association (ISDA): Ulrich Karl, Sarah Crowley
• Futures Industry Association: Doanh Le Ngoc
• City of London Law Society: Insolvency Law Committee: Peter Hughes
• Financial Markets Law Committee: Brian Gray
• R3 General Technical Committee: Mike Pink, David Mitchell
• Insolvency Service: Steven Chown
• Insolvency Lawyers Association’s Technical Committee: Gabrielle Ruiz

1. Introductions – agenda item 1

The Treasury explained that the Panel was being brought together to discuss a planned piece of secondary legislation, to further expand implementation of the resolution regime for central counterparties (CCPs) under the Financial Services and Markets Act 2023, in order to consider high-level views on the policy intent of this proposed legislation.

2. Update on the legislation – agenda item 2

The Treasury outlined that, further to establishing and operationalising the resolution regime, an additional piece of secondary legislation was now being developed to deliver on the commitment made following consultation on the regime in 2021 to fully implement the ‘No Creditor Worse Off’ (NCWO) safeguard. Responses to the consultation had asked for greater clarity over the safeguard. The Treasury noted that this legislation was specifically focused on establishing the framework for a post-resolution independent valuer to assess the treatment each relevant person (including clearing members) would have received under the hypothetical ‘counterfactual’ scenario (in which resolution action was not taken on the CCP) against the actual treatment that these persons received as a result of the resolution. This was explained as an essential step in order to calculate compensation due under any claim. The Treasury explained that the legislation would include a clear description of the counterfactual an independent valuer would need to consider when deciding on potential compensation claims.

3. High-level comments and discussion – agenda item 3

A number of technical policy points were raised in discussion which the authorities sought to address during the meeting and which they will reflect through their further work to prepare the legislation:

• One Panel member asked how compensation would be calculated if CCPs did not all have the same recovery and loss allocation arrangements in their rulebooks as compared to those available to the Bank in resolution. The Bank of England noted that, while UK CCPs have comprehensive recovery loss allocation arrangements for some scenarios, not all scenarios are covered comprehensively within the CCPs’ rules and so some losses would likely be allocated during a CCP’s insolvency. The proposed legislation was being designed to reflect this.
• One Panel member noted that a clear counterfactual would be important should the Bank of England intervene to take resolution action before a CCP had applied its full recovery arrangements, so that a valuer could clearly determine how the CCP would have crystallised its losses and how it would have deployed its rulebook tools to allocate these. The Bank of England noted that the proposed legislation would detail a set of assumptions for the independent valuer to follow, covering how the CCP’s recovery arrangements would have operated under the counterfactual scenario.
• Another Panel member noted that, under conditions of extreme market stress, a CCP may encounter difficulties in setting settlement prices that reflect fair market values for financial instruments it clears, which the Bank of England should be mindful of should it plan to perform a termination (‘tear-up’) of any of the CCP’s cleared book as part of its resolution of the CCP. The Bank of England acknowledged that determining tear-up prices may be challenging in periods of acute market stress but noted that CCPs typically have contingency arrangements in their settlement price determination procedures which are matched by the Bank’s processes for resolution.^{[footnote 1]} The Bank of England further noted that it would be important when determining tear-up prices for the Bank of England to be mindful of the settlement prices the CCP would have been likely to establish under the counterfactual scenario.
• The Panel discussed how independence of a valuer would be determined, which the Treasury confirmed the legislation would clarify.
• One Panel member asked how the legislation would interact with the Bank of England’s exercise of the power to defer a clearing member’s obligations. The Bank of England noted that its intended approach in exercising this power would be for deferred obligations to be included in the calculation of the actual treatment in resolution (unless doing so would itself have generated a loss distribution under the actual treatment which would materially deviate from the loss distribution which would have been achieved under the counterfactual scenario). The Treasury noted that this valuation issue was complex and would likely be subject to further arrangements made by the Treasury when any compensation scheme was established following a resolution.
• One Panel member queried how realistic the counterfactual assumption was that an insolvency practitioner could liquidate all the CCP’s cleared instruments immediately, and at a single price at the point the CCP entered insolvency. The Bank of England noted that this assumed liquidation of positions would be recorded through the cancelling of the positions cleared by the CCP (rather than through trading), with the insolvency practitioner having discretion to determine the fair market price at which such book-entry terminations would have hypothetically occurred.
• Another Panel member queried the relationship between the pre- and post-resolution valuations, noting that considerable time may elapse between these two processes. The Treasury noted that the proposed legislation covered post-resolution valuation only – and that pre- and post-resolution valuations have different considerations. Nonetheless, the Treasury acknowledged that there is some overlap between them and that post-resolution independent valuers would accordingly ‘have regard’ to the pre-resolution valuation.
• Another Panel member asked if the UK’s NCWO valuation arrangements would follow equivalent EU legislation. The Treasury noted that the proposed UK approach had been developed through a ‘first principles’ approach, however, that there of course may be some similarities.

4. Next steps – agenda item 4

The Treasury requested Panel members provide written comments on the legislation’s policy intent by 10 October 2025. The Treasury confirmed that a draft statutory instrument alongside draft amendments to the CCP resolution code of practice would be provided to Panel members for review in due course. The Bank noted that it would meanwhile also test with CCPs some of the counterfactual assumptions made on insolvency rules.

1. The Bank of England’s approach to determining commercially reasonable payments for contracts subject to a statutory tear up in CCP resolution: Bank of England ↩