The leading comparative assessmentof the rules and procedures of CCPsfia.org/ccp-risk-review

• Clearing members of CCPs

• Clients of clearing members

• Entities considering becoming clearing members

• Entities considering becoming clients

• CCPs that wish to benchmark themselves

• Professional advisors

• Regulators

WHO SHOULD PURCHASE THE CCP RISK REVIEW

CCP Risk Review2015

In cooperation with :

CCP RISK REVIEWThe CCP Risk Review summarizes the

rules and procedures of CCPs worldwide.

Written in practical, comparative terms

and incorporating key implications of

applicable law where relevant, CCP

Risk Review assists market participants

and regulators in scrutinizing and

understanding the risks relating to CCPs,

for both clearing members and clients.

FIA has engaged two internationally

recognized law firms–Linklaters LLP and

Milbank, Tweed, Hadley & McCloy LLP–to

conduct a thorough rule review of CCPs

in multiple jurisdictions.

Early Subscribers include:

• Bank of America Merrill Lynch

• Citibank

• Deutsche Bank

• Goldman Sachs

• HSBC

• J.P. Morgan

• Morgan Stanley

• UBS

• Wells Fargo

THE NEED – CURRENT LANDSCAPEThe mandate to clear standardized

derivatives through central

counterparties has increased the

regulatory obligations of market

participants that use CCPs. As a result,

regulators are more closely scrutinizing

the risks and responsibilities of CCP

members and entities who clear through

them as clients.

With increasing regulatory obligations

to clear OTC derivatives transactions

through CCPs coupled with an increased

focus on the clearing of exchange-traded

derivatives, there is a growing necessity

to analyze and understand the risks

involved in derivatives clearing. Market

participants must also understand and

keep current on regulatory obligations,

such as the amount of collateral to post

to the CCP, the handling of segregated

accounts, and the actions necessary upon

the default of a clearing member or the

CCP itself. In addition, there are some

very specific challenges presented to

individual reviewers of CCP rulebooks

that make it more difficult to interpret

them including:

• There is no standardization of any

kind across the rulebooks of different

CCPs (and, sometimes, across different

services of the same CCP), so every

rulebook feels unfamiliar

• Similar terms and concepts are given

different names in different rulebooks

• Different terms and concepts are

given the same name across different

rulebooks

• Many rulebooks are written in different

languages and the translations into

English are often poor

• CCPs operate across different legal

systems and the legal consequences of

some provisions may apply differently

depending upon the applicable legal

system

THE SOLUTION – MANAGING RISK IN A POSITIVE WAYThe CCP Risk Review was developed with

extensive input from risk, legal and credit

professionals to identify and disseminate

detailed information relating to CCPs

worldwide in a consistent manner,

notwithstanding the different structures

and terminology used in the rulebooks of

different CCPs. This easy-to-use and cost-

effective guide assists market participants

and regulators in scrutinizing and

understanding the risks relating to CCPs

by providing an overview and analysis

of the rules and procedures governing

certain CCPs, as well as timely updates on

changes to these rules.

CURRENT SUBSCRIBERS ARE USING

THE SURVEYS TO:

• Support CCP due diligence efforts

• Provide analysis of CCP risk exposure

to various stakeholders involved in the

clearing process

• Assist in determining whether a CCP is

a “QCCP”

• Utilize industry wide best practices

• Track the practical impact of CCP rule

changes as they occur

• Compare and benchmark the rules of

different CCPs

• Allow in-house teams to focus on higher

value matters

• Ensure rule assessments are up to date.

COMPONENTS OF THE REVIEW – HOW IT WILL WORK FOR YOUA detailed questionnaire will be

completed for each CCP. The

questionnaire answers clearly and

succinctly, in straightforward and reader-

friendly language, those issues that

market participants find most relevant,

while providing background and/or

commentary on the practical effect of

applicable law where necessary. The

questionnaire answers are written in a

consistent style and adopt a common

glossary to assist comparisons across

CCPs, including across different

jurisdictions. CCP Survey Questionnaires

may be purchased in separate modules

specified by; (i) the Base Module, (ii) the

Client Clearing Module and (iii) PFMI

Module.

BASE MODULE INCLUDES:

1 Legal issues (including registration

status of CCP, regulator, available legal

opinions, etc.)

2 Membership requirements

3 Clearing member committees

4 Trade flow and trading limits

5 Margin and collateral (including initial

and variation margin methodology, VM

haircutting, types of collateral haircuts,

account structure)

6 Termination and withdrawal

7 Rule changes and emergency powers

8 Clearing member default (including

determination of default, default

management process, default

resources, related disclosure issues)

9 General CCP disclosure requirements

10 CCP liquidity management

11 CCP “end of waterfall” procedures

12 CCP recovery and wind-down plans

13 Custody and investment risks

CLIENT CLEARING MODULE

INCLUDES:

1 Relationship between the CCP, clearing

members and clients (including indirect

client business)

2 Segregation of contracts and collateral

3 Pre-default (“business as usual”)

portability

4 Post default portability

5 CCP default-related issues (including

netting and setoff of house and client

contracts, rehypothecation/investment

of client assets, allocation of liability

between clearing member clients)

PFMI MODULE

The PFMI Module provides an analysis

of the extent to which the rules and

procedures of a CCP demonstrate the

CCP’s compliance with the Principles

for Financial Market Infrastructures.

The PFMI Module assists institutions

in evaluating a CCP’s compliance by

providing commentary with respect to

each corresponding key consideration,

addressing elements that indicate the

extent to which the relevant CCP’s

compliance with each key consideration is

or is not observed.

REGULAR UPDATESFor an annual subscription fee, a purchaser will be notified of any rule changes as they

occur and updates to the relevant CCP survey questionnaire will be made available

electronically as soon as practicable.

SUSCRIBE TODAYFor a specified fee organizations can purchase any of the survey modules that have

already been produced by the law firms and commission (subject to minimum demand

requirements) survey modules for additional CCPs or their services.

The responses and analysis will be made available electronically. Users will have

electronic access to the survey questionnaire answers for the relevant modules in a

searchable online format through www.ccpriskreview.org.

A completed questionnaire will contain an analysis of the material issues, primarily

based on publicly available rulebooks and procedural documents. It will be noted where

an answer incorporates information obtained directly through conversations with the

CCP.

Sample answers to the survey, up to date list of service offerings, free demo,

as well as detailed pricing information can be found on FIA’s website at:

fia.org/ccp-risk-review.

CCP RISK REVIEWS AVAILABLE IN 2015CCP & SERVICE

ASX Clear (Futures) Pty Ltd - OTC

ASX Clear (Futures) Pty Ltd - Exchange Traded Contracts, Cash Bonds and Repos

BM&F Bovespa - Derivatives

BME Clearing (formerly MEFF) - Financial Deriviatives

Cassa di Compensazione E Garantia Spa

Clearing Corporation of India Limited - CBLO

Clearing Corporation of India Limited - FX

Clearing Corporation of India Limited - FX Forwards

Clearing Corporation of India Limited - Securities

CME Clearing - CDS

CME Clearing - FX

CME Clearing - IRS

CME Clearing - Listed

CME Clearing Europe Limited

Eurex Clearing AG - OTC IRS

Eurex Clearing AG - Transactions at Eurex Deutschland and Eurex Zürich

FICC - GSD

FICC - MBSD

HKFE Clearing Corporation Limited

ICE Clear Credit LLC - CDS

ICE Clear Europe Limited - CDS

ICE Clear Europe Limited - Listed

ICE Clear US - Listed Derivatives

Japan Securities Clearing Corporation - OTC IRS

Japan Securities Clearing Corporation -Listed derivatives on JGBs/securities indices

Korea Exchange - Listed

CCP RISK REVIEWS AVAILABLE IN 2015 (CONT.)CCP & SERVICE

Korea Exchange - OTC

LCH.Clearnet Limited - ForexClear (FCM)

LCH.Clearnet Limited - ForexClear (SCM)

LCH.Clearnet Limited - Nodal (FCM)

LCH.Clearnet Limited - RepoClear (SCM)

LCH.Clearnet Limited - SwapClear (FCM)

LCH.Clearnet Limited - SwapClear (SCM)

LCH.Clearnet LLC

LCH.Clearnet SA - Cash/derivatives

LCH.Clearnet SA - CDSClear (SCM)

LCH.Clearnet SA - Fixed income

LME Clear

Nasdaq OMX Clearing AB (Swedish branch) - Financial Products

National Securities Clearing Corporation Ltd - F&O and currency & interest rate

derivatives

Natural Gas Exchange - Listed derivatives

Options Clearing Corp - Listed

Options Clearing Corp - OTC

Options Clearing Corp - Securities Lending

Shanghai Clearing Corp - IRS

The SEHK Options Clearing House Limited

Other CCP Services forthcoming as they are commissioned by market subscribers.

Contact: Jackie Mesa2001 Pennsylvania Avenue N.W. , Suite 600

Washington D.C. 20006-1823+1 202.466.5460 | Fax: +1 202.296.3184

www.FIA.org

Contact: Mitja Siraj2nd Floor, 36-38 Botolph Lane

London EC3R 8DE+44 (0) 20 7929 0081 | Fax: +44 (0) 20 7621 0223

www.FIA-Europe.org

Contact: Phuong TrinhLevel 21, Centennial Tower

3 Temasek AvenueSingapore 039190

+65 6549 7337 | Fax: +65 6549 7001www.FIAAsia.org

To learn more go to fia.org/ccp-risk-review for an overview of the questionnaire and a few sample survey answers.