Central counterparties in financial difficulties Failure of a CCP Resolution
A resolution regime exists for circumstances where a CCP’s recovery actions are either not successful or are deemed unlikely to be successful, or where continued recovery actions are considered inappropriate (for example, where continuing with those actions could itself have significant adverse impacts on financial markets). It provides a resolution authority with legal powers to intervene in advance of the CCP entering into insolvency, either to restore it to health or to manage its failure in an orderly way.
	The objectives of the existing CCP resolution regime include:
Maintaining the critical clearing services of a CCP
Protecting public confidence in the UK's financial system
Avoiding interference with property rights
Limiting contagion to wider markets, and more broadly, protecting financial stability
Protecting public funds.
	A resolution regime requires a resolution authority which is responsible for planning for and executing a resolution. This resolution authority creates ‘resolution plans’ which consider the scenarios in which a market participant may fail, and set out the preferred strategy and powers and tools that the resolution authority will use in resolution. The UK’s resolution authority is the Bank of England (the Bank), which is also the authority responsible for protecting and enhancing the resilience of the UK financial system. The Resolution Directorate at the Bank which would oversee any CCP resolution is organisationally distinct from the part of the Bank responsible for the ongoing regulation and supervision of CCPs (which has oversight of CCP recovery). The FRF Review measures within this Act which look to reform the Bank’s role as CCP regulator will not apply to the Bank in its capacity as resolution authority.