Financial Stability Report and Record (July 2019)

Abstract: The Financial Stability Report and Record set out our Financial Policy Committee's view on the stability of the UK financial system and what it is doing to remove or reduce any risks to it.

Analysis of central clearing interdependencies (2018)

Abstract: After reviewing the findings from the 2016 data collection, which were published in July 2017, the Committees agreed to conduct another but more streamlined data collection to assess whether the findings from the 2016 analysis were stable over time. The results are broadly consistent with the previous analysis with the data as of September 2016 and show that clearing members are also important providers of other critical services required by CCPs and can maintain several types of relationships with multiple CCPs simultaneously.

Evaluation of the effects of financial regulatory reforms on infrastructure finance (2018)

Abstract: This consultative document presents the results of, and seeks comments on, the evaluation of the effects of financial regulatory reforms on infrastructure finance (IF). The evaluation is carried out under the FSB framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms. It is part of a broader evaluation of the effects of reforms on financial intermediation, and complements work under the Argentine G20 Presidency to develop infrastructure as an asset class. The final report will be published at around the time of the G20 Summit in November 2018.

Analysis of central clearing interdependencies (2017)

Media:, Reuters, and Politico Pro

Abstract: This is the first comprehensive data collection of its type, from 26 CCPs across 15 jurisdictions in North America, South America, Europe and Asia-Pacific. The data permit a global analysis of interdependencies in central clearing across a broad range of products. The analysis addresses CCPs, their members and other financial institutions that are linked to CCPs such as custodians, settlement banks, credit and liquidity providers and investment counterparties. These data provide a unique view of the central clearing landscape that is not available elsewhere.

Supervision of financial market infrastructures - Annual Report (2015)

Abstract: The Bank of England has responsibility for supervising financial market infrastructures (FMIs) as part of its mission to promote the good of the people of the United Kingdom by maintaining monetary and financial stability. These FMIs are recognised payment systems, central counterparties (CCPs) and securities settlement systems. This report sets out how the Bank has exercised its responsibilities over the past year, and is part of the Bank's commitment to openness and accountability.

Blog Posts

Margin call! Cash shortfall? with Marco Bardoscia and Nicholas Vause (2020) - Bank Underground

Abstract: Participants in derivative markets collect collateral from their counterparties to help secure claims against them should they default. This practice has become more widespread since the 2007-08 financial crisis, making derivative markets safer. However, it increases potential margin calls for counterparties to top up their collateral. If future calls exceed available liquid assets, counterparties would have to borrow. Could money markets meet this extra demand? In a recent paper, we simulate stress-scenario margin calls for many of the largest derivative-market participants and see if they could meet them - including because of payments from upstream counterparties - without borrowing. We compare the sum of any shortfalls with daily cash borrowing in international money markets.

Macroprudential liquidity requirements with Iñaki Aldasoro, Sam Langfield, Zijun Liu and Tomohiro Ota (2019) - VOX CEPR Policy Portal

Abstract: Macroprudential regulation is in vogue, but liquidity requirements are typically seen only as a microprudential tool. This column shows how a macroprudential approach to liquidity requirements could improve regulatory efficiency. By concentrating liquidity in systemically important banks, financial stability can be enhanced without increasing aggregate requirements.

Does the reliance of principal trading firms on banks pose a risk to UK financial stability? with Jack Worlidge and Magda Rutkowska (2019) - Bank Overground

Abstract: Principal trading firms undertake automated or algorithmic trading in fast markets and rely on a small number of banks for clearing services. This creates a concentration risk that could threaten the resilience of market liquidity.

CCP porting, are there lessons to be learnt from elsewhere? with Fernando V. Cerezetti (2019) - Bank Underground

Abstract: Post-crisis regulatory reforms have reshaped and increased the amount of clearing activity in the OTC derivatives market. An emerging issue is so-called "client porting" - i.e. how central counterparties (CCPs) can transfer positions from one clearing member (CM) to another in the aftermath of one member defaulting. In this post, we discuss possible ways to offer clients temporary access to clearing services following a CM default, which we believe could increase the likelihood of successfully porting clients and avoiding further pressure on prices and market stability.

New banking regulation: is it affecting the clearing of derivatives? with Jonathan Smith (2019) - Bank Underground

Abstract: Just like the beginning of an unforeseen family argument, two key tenets of the post-crisis reforms have unexpectedly started to butt heads: the leverage ratio capital requirement and the mandatory requirement to centrally clear certain over-the-counter (OTC) derivatives.

Bank Liquidity Requirements: How to Get More Bang for your Buck with Iñaki Aldasoro, Ester Faia, Sam Langfield, Zijun Liu and Tomohiro Ota (2016) - Bank Underground

Abstract: We make the case for a macroprudential approach to liquidity requirements in the cross-section of banks. Currently, the liquidity coverage requirement is applied uniformly across banks. This microprudential approach overlooks banks' relative systemic importance: owing to their size, complexity and position in the interbank funding network, some banks can cause inordinate damage to the rest of the banking system. When this externality is taken into account, we show that systemically important banks should be subject to more stringent liquidity requirements. This cross-sectional macroprudential approach promises "more bang for the buck": systemic risk can be reduced without increasing the stringency of liquidity requirements for the banking system as a whole.