Research On The Central Counterparty Resolution Mechanism

As an important part of the financial market infrastructure,the central counterparty clearing has greatly facilitated the financial business and promoted the efficient operation of the financial industry.The central counterparty clearing mechanism is widely used around the world,from the traditional on the market to the derivatives market.The central counterparty as a centralized clearing,making the original contract with the central counterparty side to form a single debt and debt relationship.Lower credit risk exposure,settlement efficiency has also been significantly improved,play a financial market infrastructure support role.However,the central counterparty has also become a risk collection,bringing together a large number of clearing members and a large number of trading products.If clearing members breach of contract,the central counterparty's financial resources are not sufficient to allocate losses,it may threaten the central counterparty to continue to provide clearing services,resulting in the central counterparty itself default;then the adverse consequences of default risk spread to other clearing members who are likely to cause systemic risk,endanger the entire clearing system and the financial system,so the central counterparty may also lead to systemic risk.Central counterparty has aroused widespread concern in the international community.Based on this,this article to the central counterparties resolution as the theme,to explore the following aspects of the problem.The first part,an overview of the central counterparty resolution.First of all,it introduces the definition,the present situation and the pros and cons of the central counterparty,and then analyzes the necessity,the basic goal and the principle of the central counterparty resolution,lay the foundation for the writing.The second part,the central counterparty resolution authority.Primary question of the central counterparty resolution is who to carry out resolution activities,and which power the resolution authority can exercise.In dealing with the central counterparty,involving a number of other public institutions,therefore,analyze the relationship between the resolution authority and other institutions.The third part,financial resources and loss sharing in resolution.This section explores the financial resources required to central counterparties' resolution,including both pre-funded and ex post contributions.As the distribution of losses may lead to damage to legal rights and interests of some creditors,therefore,"no creditors worse than the liquidation" safeguards provide a strong relief for the creditors.The fourth part,the central counterparty resolution procedures.Generally,after first evaluating the central counterparty,the resolution authority shall make decision to initiates the resolution procedure if it conform to the resolution conditions.Through a definitive valuation,the resolution authority use one or more resolution tools to carry out to resolution.The resolution tools include positions and loss allocation tool,write-down and conversion tool,business sale tool,bridge central counterparty tool and so on,their characteristics and operations are different.The fifth part,the central counterparty cross-border resolution cooperation.Because the central counterparty provides services for a large number of clearing members,some large central counterparty's influence beyond local country,so the central counterparty resolution need cross-border cooperation.The main elements of cross-border cooperation include the establishment of crisis management groups and information sharing mechanism,so that the systemic importance central counterparty can be properly resolved,avoid systemic risk spread.