ESMA contributes to global CCP fire drill exercise

Key dates

13 November 2023

– Week-long 2023 Global CCP fire drill coordinated by ESMA and other authorities, simulating the default of a hypothetical major clearing member across more than 30 CCPs

5 December 2024

– Kick-off meeting for the second industry-led multi-CCP default simulation (CIDS 2025) organised by CCP Global in Singapore, setting parameters and expectations for the 2025 exercise

3 November 2025

– Start of the 2025 CCP Global International Default Simulation (CIDS) multi-CCP fire drill window (up to 7 November 2025 for some CCPs), simulating the failure of a hypothetical common participant

4 December 2025

– Debrief meeting in Singapore for CIDS 2025 participants to discuss operational outcomes, bottlenecks, and potential improvements

19 June 2026

– ESMA and the lead authorities publish the 2025 CIDS key findings and recommendations, outlining expectations for further progress in standardisation, porting, portal-based solutions, and potential market stress overlay modules

TBD (from 2026 onward)

– Next iteration of the global CCP fire drill with enhanced features (including possible market stress overlay and improved porting tests), timing to be set by CCP Global and lead authorities; firms should expect fire drills to continue on a periodic basis

Suggested considerations

• CCPs should review and update their default management procedures to align with emerging cross-CCP standards, including harmonised communication conventions, standardised information templates, and coordinated auction timelines.
• Clearing members should conduct a cross-CCP gap analysis of their default-management playbooks to ensure they can support simultaneous auctions and calls from multiple CCPs without creating operational bottlenecks.
• CCPs and clearing members should implement or upgrade portal-based communication and workflow tools for default events, replacing fragmented email- or spreadsheet-based processes where feasible.
• Clearing brokers and client-clearing firms should test and, where necessary, redesign their porting arrangements (including client consent, documentation, booking models, and operational capacity) to ensure they can port positions and collateral under stressed but realistic timelines.
• Risk and operations teams at CCPs and clearing members should incorporate findings from the 2023 and 2025 CIDS exercises into their internal default-management training, drills, and board reporting on operational resilience.
• Firms participating in future CIDS exercises should prepare internal governance arrangements to capture lessons learned (e.g. structured post-mortems, remediation plans, and tracking of actions) and be ready to evidence these to supervisors.

What changed

• - Supervisory expectations are raised for standardisation and reduction of fragmentation in CCP default-management procedures and communication conventions, with a strong push toward harmonised formats, timelines, and messaging standards across CCPs.
• Lead authorities explicitly promote greater use of portal-based solutions (rather than ad hoc email or bespoke channels) for communication, information sharing, and auction-related workflows between CCPs, clearing members, and clients during a defaul
• Authorities call for more realistic testing of porting arrangements, including end-to-end operational tests that reflect real-life constraints (documentation, client consent, timing of transfers, and coordination across CCPs and intermediaries).
• The lead authorities propose considering a voluntary “market stress overlay” module in future CIDS exercises, creating a coherent cross-CCP macro stress scenario to test whether operational capacity and constraints hold under stressed but plausible m
• ESMA confirms that global CCP fire drills are now a core component of system-wide resilience expectations, effectively embedding regular multi-CCP default simulations into ongoing supervisory practice rather than one-off experiments.
• The 2025 CIDS report follows ESMA’s 2023 Global CCP fire drill report and indicates a multi-year supervisory programme around default management, implying that outcomes from these fire drills will be used to inform future guidance, supervisory priori

Who is affected

• EU-authorised central counterparties (CCPs) subject to EMIR, particularly those participating in CIDS or other multi-CCP fire drills.
• Clearing members of EU CCPs, including EU and third-country banks and investment firms that participate in multiple CCPs.
• EU-authorised investment firms and credit institutions that provide client clearing services and are operationally responsible for porting client positions and collateral.
• Non-EU CCPs and clearing members participating in CIDS that clear EU products or have EU clients, to the extent they fall under the oversight of ESMA, national competent authorities, the Bank of England, CFTC, BaFin, Bundesbank, and other lead authorities.
• Market infrastructures and service providers supporting CCP default management (e.g. auction platforms, communication portals, operational outsourcing providers) whose tools may be used to implement portal-based and standardised solutions.