The European Securities and Markets Authority (ESMA) launched its sixth stress test exercise for Central Counterparties (CCPs) on Thursday, covering 16 CCPs and introducing a Recovery and Resolution Component for the first time.
The exercise, mandated under the European Market Infrastructure Regulation (EMIR), covers all authorised EU CCPs and two UK-based Tier 2 CCPs. The adverse market scenario is provided by the European Systemic Risk Board (ESRB).
The new component shifts the supervisory lens beyond whether CCPs can absorb severe shocks. ESMA will now assess how recovery and resolution tools would distribute losses across clearing members and other stakeholders if activated during a crisis.
“This year’s exercise onboards the Recovery and Resolution Component to measure the aggregate impact from the activation of CCPs’ recovery and resolution arrangements,” said Klaus Löber, Chair of ESMA’s CCP Supervisory Committee.
The framework retains its credit stress test, concentration risk analysis and reverse stress test components alongside the new addition.
ESMA plans to issue the data request in early May, followed by joint validation with National Competent Authorities. Final results are expected in Q1 2027.
ESMA’s fifth exercise in 2024 found the EU clearing system resilient while flagging gaps in concentration risk coverage across asset classes.
