Global CCP fire drill exercise summary report

The Bank of England (BoE), together with Bafin, the Bundesbank, the Commodity Futures Trading Commission and the European Securities and Markets Authority (ESMA), have published a summary report with key findings from the 2025 CCP Global International Default Simulation (CIDS) exercise. The "fire drill" exercise involved 38 central counterparties (CCPs), together with their members, involving the simulation of the default of a hypothetical common clearing member across a wide range of asset classes. This included commodities, equities, interest rate swaps, credit default swaps and foreign exchange. It was the largest CIDS exercise to date and was coordinated by CCP Global, an industry body representing CCPs globally.

The exercise demonstrated that CCPs and clearing members are broadly capable of executing default management procedures concurrently across multiple CCPs. However operational pressures—particularly resource constraints, competing priorities, and limited availability of experienced personnel—were evident. Feedback also highlighted the need for greater standardisation of communication, auction processes and file formats across CCPs, as well as improved use of portal-based systems to reduce operational risks.

In a press-release published on the same day, ESMA listed the areas from the findings where further progress is expected ahead of the next iteration, including:

• Encouraging industry-led progress to reduce fragmentation in procedures and communication conventions employed by CCPs, and promote greater use of portal-based solutions.
• Supporting more realistic testing of porting arrangements to better reflect operational conditions.
• Considering implementing a voluntary "market stress overlay" module with a coherent cross-CCP macro stress scenario so as to fully test operational capacity and constraints under stressed but plausible market conditions.

The next CIDS fire drill exercise is expected to occur in 2027.

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