ESMA's Steven Maijoor: CCP resolution should focus on loss redistribution

Recovery and Resolution of CCPs: let’s bring the lifeboats in place
Banque de France’s policy conference on Recovery and Resolution of CCPs – Paris, 24 June 2016
Steven Maijoor
In my view, CCP resolution tools should aim to preserve the continuation of critical services while redistributing losses to the CCP’s shareholders and/or user community. In general, I believe that resolution authorities should have discretion to select the resolution tool to apply in a given scenario from the widest possible list: it is better to have one extra tool in the authorities’ toolkit than one less. Where tools have a significant impact on the overall market, and CCP clearing members and their clients, additional safeguards and further scrutiny can be introduced before they are used. Hence, the solution should not simply be to eliminate them from the list of eligible tools.
This is particularly the case for initial margin haircutting. I am of the view that this tool should not be excluded a priori but seriously considered as a last-resort resolution tool after all other resolution tools have been exercised. However, haircutting of initial margin should ensure that the residual initial margins are still compliant with EMIR requirements. If an initial margin haircutting resulted in a margin call the day after resolution, it would be more advisable to consider a cash call in resolution. Should initial margin haircutting be used, my view is that this should apply to both clients and clearing members in order to avoid altering market structures in favour of indirect clearing.
The full speech is available at

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