Fri, November 29, 2024
Thu, November 28, 2024

BoE finds potential vulnerabilities in financial market plumbing

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The Bank of England has identified certain vulnerabilities in its review of central counterparties (CCPs), which are critical financial market infrastructures that manage the risk of default by clearing and settling trades between parties. The review, part of a broader stress test, found that while CCPs are generally resilient, there are areas where improvements are necessary to enhance their stability and risk management practices. The vulnerabilities include issues related to margin practices, the management of liquidity risks, and the potential for procyclicality in margin calls. The Bank of England emphasized the importance of CCPs in maintaining financial stability and announced plans to work with these entities to address the identified weaknesses, ensuring they can withstand severe but plausible market stress scenarios.

Read the Full Reuters Article at [ https://www.reuters.com/business/finance/bank-england-finds-some-vulnerabilities-probe-central-counterparties-2024-11-29/ ]