The central counterparty (CCP) SIX x-clear and the central securities depository (CSD) SIX SIS have significantly improved their recovery plans compared with the prior versions. In particular, both FMIs are able to implement recovery measures at their own discretion and independently of the parent company SIX Group. SIX x-clear has also initiated improvements to enable it to access additional funds for loss absorption in the event of the default of a connected central counterparty. FINMA approved both plans for the first time in 2021, on the basis of the 2020 versions, although a number of conditions remain outstanding and need to be implemented.
FINMA has defined its preferred resolution strategy for SIX x-clear. This aims to temporarily continue the systemically critical functions for a maximum of six months to enable an orderly wind-down of operations. Depending on the crisis scenario, various instruments can be used in the event of resolution to impose losses or recapitalise the company to enable a wind-down. They consist firstly of the pre-financed capital reserved for a resolution (gone concern capital). Secondly, the central counterparty can access funds from clearing members, specifically in the form of resolution cash calls or the writedown of claims. SIX x-clear’s capital would have to be written off first before these instruments could be used.
FINMA presented its preferred resolution strategy to the SNB, the SIF and the international crisis management group for SIX x-clear in 2021. Moreover, it also engaged in in-depth discussions, including as part of an international expert group, on possible resolution scenarios, the financial resources available to deal with such a scenario and potential effects on financial stability. To prepare the regulatory requirements for implementing the resolution strategy, it added its views to the ongoing work in evaluating the Financial Market Infrastructure Act. This relates in particular to creating a legal basis for CCP-specific resolution tools.
Various other prerequisites for implementing the preferred resolution strategy still need to be put in place.
For SIX SIS, FINMA has carried out preparatory work to define a preferred resolution strategy.