A discussion paper on client clearing: access and portability
3
1. Introduction
In 2009, the G20 Leaders made a commitment to ensure that all standardised over-the-counter (OTC)
derivatives contracts are cleared through CCPs. Increased use of central clearing generally, and with a
particular focus on derivatives since the 2009 G20 commitment, is intended to enhance financial stability
by simplifying the network of counterparty exposures between financial institutions and reducing the
aggregate size of these exposures through multilateral netting by a CCP.
In light of the introduction of clearing mandates in some jurisdictions, CCPs have become
increasingly critical components in the financial system. In 2018, the Derivatives Assessment Team (the
DAT Report)
3
confirmed that the provision of client clearing services was concentrated in a relatively small
number of bank-affiliated clearing firms.
Clients are not typically direct clearing participants but rather require access to clearing through
clearing participants. As a result, access to client clearing is a critical issue for the success of the G20
reforms, especially in jurisdictions where the clearing obligation also applies to clients. Principle 19 of the
PFMI states that financial market infrastructures (FMIs), including CCPs, “should identify, monitor, and
manage the material risks to the FMI arising from tiered participation arrangements”. Moreover, Principle
14 of the PFMI states: “a CCP should have rules and procedures that enable the segregation and portability
of a participant’s customers and the collateral provided to the CCP with respect to these positions”.
Against this background, CPMI and IOSCO decided to analyse whether and to what extent
concentration in client clearing creates issues of concern specifically in relation to client access. In
particular, the CPMI-IOSCO Steering Group mandated the Policy Steering Group (PSG) to: (1) develop
knowledge and understanding regarding new access models by which entities (that historically have
participated indirectly as “clients”) could directly access CCP services; (2) develop knowledge and
understanding of current porting processes in place at CCPs; (3) examine and analyse possible solutions
to facilitate access and portability arrangements; and (4) consider the potential benefits, risks and
challenges that new access models and potential solutions may bring with respect to access.
4
The PSG gathered information through an industry workshop in July 2019 and a survey addressed
to CCPs, CCSPs and clients in late 2019 as well as follow-up work through targeted interviews in the
autumn of 2020.
Section 3 provides an overview of direct and sponsored access models based on the results of
the survey and targeted interviews described above; considers challenges related to direct and sponsored
access models; recent uptake and activity; and the impact of direct and sponsored access models on
access.
Section 4 describes an overview of potentially effective porting practices, drawing attention to
communication, coordination and harmonisation as fundamental principles for successful porting. It also
describes notable obstacles to address when developing a porting protocol and suggests next steps for
industry consideration. There is significant heterogeneity in the business models of CCPs and CCSPs, as
well as in regulations across jurisdictions, so not all of the suggestions are equally applicable.
3
See FSB, Incentives to centrally clear over-the-counter (OTC) derivatives, November 2018, www.fsb.org/2018/11/incentives-to-
centrally-clear-over-the-counter-otc-derivatives-2/
.
4
Principle 18 of the PFMI provides that FMIs, including CCPs “should have objective, risk-based, and publicly disclosed criteria
for participation, which permit fair and open access”. Key consideration 1 notes that “[CCPs] should allow for fair and open
access to its services, including by direct and, where relevant, indirect direct paricipants and other FMIs, based on reasonable
risk-related participation requirements”.
