The Bank of England said on Thursday that the central counterparties (CCPs) in Britain's financial system were 'resilient' after publishing the conclusions of its first public stress test for ICE Clear Europe, LCH and LME Clear.
The BoE said it checked whether the CCPs were resilient to a market stress scenario and to the simultaneous default of the two largest clearing member groups.
"While results vary across CCPs, no CCP experienced full depletion of prefunded financial resources or a negative liquidity balance," the BoE said. The exercise started in October 2021 and was designed to be as severe as the worst historical market stress scenario experienced by each CCP up to that point.
Recent weeks have witnessed record falls in some British government bond prices, and forced the BoE to stabilise the market due to the risk of a fire sale by liability-driven investment funds used by the pensions industry. "We will engage these CCPs on our findings, which will help the Bank target its supervision and inform CCPs' approach to risk management," Cunliffe said.Reporting by David Milliken; Editing by Kate Holton and John Stonestreet
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