Principles for CCP Stress Testing
Central counterparties (“CCPs”) employ stress testing as a critical component of prudent risk management practices. The primary functions of this tool are aggregate financial resource sizing, liquidity resource sizing, and identification of material impacts of tail events on clearing member and customer exposures. Global standards, and the local regulatory adoption thereof, require that stress testing encompasses market scenarios that are deemed ‘extreme but plausible.’
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
