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Principles for CCP Stress Testing – CME Group
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.’