Schedule 11: Central counterparties Part 5 – Special resolution action Tear-up power
Paragraph 31 sets out the fourth stabilisation option (to make one or more tear-up instruments for the purpose of ensuring the CCP has a matched book). This would involve the Bank terminating all or part of any contracts held by the CCP with its clearing members, allowing the Bank to rebalance the CCP’s finances.
	Sub-paragraph (4) sets out that the Bank must either a) require a CCP to make a commercially reasonable payment to a clearing member who is a party to a contract being terminated, or b) require the clearing member who is a party to the contract to make a commercially reasonable payment to the CCP. Sub-paragraph (5) requires the Bank to publish a statement of policy within 12 months of the power coming into force as to how it determines what a commercially reasonable payment is.
	Sub-paragraph (8) defines a matched book.