rec_42

(42) The critical functions of a failing CCP should be maintained, although re-structured with changes to the management where appropriate, through the application of resolution tools and, to the largest extent possible, with the use of private funds and without reliance on extraordinary public financial support. That objective could be achieved by allocating outstanding losses and restoring the CCP to a matched book through application of the position and loss allocation tools in the case of default losses, or, in the case of non-default losses, through the write-down of equity instruments and the write-down and conversion to equity of unsecured liabilities to absorb losses and recapitalise the CCP. To prevent the need for the application of government stabilisation tools, the resolution authority should also be able to use the resolution cash call following a non-default event. A CCP or specific clearing service should also be able to be sold to or merged with a solvent third-party CCP that is able to conduct and manage the transferred clearing activities. In line with the objective of maintaining the critical functions of the CCP and prior to taking the actions described above, the resolution authority should generally enforce any existing and outstanding contractual obligations towards the CCP in line with how they would be called in its operating rules, including in particular any contractual obligations by clearing members to meet recovery cash calls or to take on positions of defaulting clearing members, whether through an auction or other agreed means in the CCP’s operating rules, as well as any existing and outstanding contractual obligations committing parties other than clearing members to any forms of financial support.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-12 · Text as adopted (Official Journal); later amendments are not incorporated in this text.