BoE consults on future regulatory framework for CCPs

The Bank of England (BoE) has published a consultation paper titled "Ensuring the resilience of CCPs" as part of a broader package of reforms aimed at strengthening the UK's regulatory framework for central counterparties (CCPs). The proposals follow the rule-making powers granted under the Financial Services and Markets Act 2023 and seek to restate the majority of CCP-facing provisions currently in the UK European Market Infrastructure Regulation (EMIR) in the BoE's rulebook.

The BoE intends to move four UK EMIR technical standards to its rulebook—Commission Delegated Regulation (EU) No 152/2013, Commission Delegated Regulation (EU) No 153/2013, Commission Implementing Regulation (EU) No 1249/2012 and Commission Implementing Regulation (EU) No 484/2014. For the most part, the BoE intends to restate the UK EMIR provisions. However, there are some areas where substantive policy changes are proposed which will impact CCPs and their clearing members and the clients of clearing members.

First, the BoE is proposing to introduce a second tranche of CCP capital ("skin in the game" or SITG) in the default waterfall. This second tranche of SITG, referred to as SSITG, would be at the level of mutualised default fund and would be used pro rata with the default fund contributions of non-defaulting members in a default loss scenario.

Secondly, the BoE is proposing changes to the porting requirements which are aimed at increasing the likelihood of porting client positions. Among other things, CCPs will be required to: (i) include porting in their testing of default management procedures; (ii) to trigger porting to a pre-agreed, backup clearing member that has been designated by all of the clients in the omnibus account without proactively seeking consent from clients in the porting window; and (iii) consider the portability of each clearing member's client portfolio when determining default fund contribution allocations between clearing members.

The BoE's proposals also include: (i) enhancing margin requirements and issuing a draft supervisory statement on CCP margin; (ii) strengthening CCP liquidity risk controls by incorporating into rules some elements of the European Securities and Markets Authority's Opinion on Liquidity Risk Assessment; (iii) enhancing the change in control framework and expanding its scope; (iv) streamlining and increasing the clarity and proportionality of supervisory processes, including model reviews, recognition and extensions. The BoE has published a draft statement of policy: the BoE's approach to supervisory processes (model changes, recognition orders and variations of recognition orders) and margin permissions; and (v) clarifying the scope of and approval process for interoperability arrangements.

The deadline for responses on the consultation is 18 November, with final rules expected no earlier than the end of H1 2026. The BoE proposes that CCPs will have six months to implement the rules, except for proposed extended implementation times for the second skin in the game requirement, which would be phased in over two years, and the requirement for CCPs to provide a margin simulation tool, which would apply 12 months after the final rules are published.

The BoE proposes to make four instruments in relation to these reforms, as detailed in Annex 2 of the consultation.

In addition to the policy materials listed above, the following draft materials were also published alongside the consultation:

• Draft statement of policy: the BoE's approach to permissions in relation to CCP rules.
• Draft statement of policy: the BoE's approach to comparable compliance permissions.
• Draft statement of policy: BoE's approach to tiering non-UK central counterparties.

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