ESMA contributes to global CCP fire drill exercise
Executive Summary
ESMA has announced its participation as a lead authority in the 2025 CCP Global International Default Simulation (CIDS), a coordinated multi-jurisdictional default-management “fire drill” involving 38 CCPs and their clearing members, simulating the failure of a common participant in November 2025. This is not a new binding rule but it signals heightened supervisory expectations on default management, cross-CCP coordination, porting, and operational resilience, which EU CCPs and clearing members should treat as de facto supervisory standards.
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
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.
Key Dates
Compliance Impact
The immediate legal impact is indirect, as the publication itself does not amend EMIR or introduce binding RTS/ITS, but it clearly elevates supervisory expectations on default management, porting, and operational resilience for CCPs and clearing members. Failure to adapt to these expectations may expose firms to supervisory criticism, remediation demands, and heightened scrutiny of their default m
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original ESMA source before acting. Full disclaimer.
Summary
ESMA contributes to global CCP fire drill exercise 19 June 2026 CCP In November 2025, 38 central counterparties (‘CCPs’) from across the world, together with clearing members, conducted a coordinated fire drill exercise simulating the failure of a hypothetical common participant. Known as the CCP Global International Default Simulation (CIDS), the exercise aimed to promote preparedness and coordination across jurisdictions. ESMA participated in the lead authorities’ group together with Bundes...