Trading

Clearing houses have 'gaps' in emergency plans, say Iosco and BIS

Most have sufficient buffers to survive the collapse of one member but might not withstand further defaults

Clearing houses have 'gaps' in emergency plans, say Iosco and BIS
Photo: iStockPhoto

There are “gaps and shortcomings” in how clearing houses have prepared for market crises and member defaults, two global watchdogs have found.

In a joint review of 10 derivatives clearing houses across nine jurisdictions, the Bank for International Settlements and the International Organization of Securities Commissions found that a number had not yet put in place a full set of recovery rules and procedures to deal with significant losses - including those arising from member defaults.

WSJ Logo