Some vulnerabilities within major clearing houses have been found in the Bank of England's latest stress test of the UK’s financial system.
ICE Clear Europe Ltd, LCH Ltd and LME Clear Ltd were studied in the latest routine test and showed larger losses than in last year’s simulation.
Though the clearing houses, which facilitate payments between banks, remained resilient, some issues were seen in highly concentrated positions, the Bank of England said.
“The stress test results do not suggest that this is a cause for concern,” deputy governor for financial stability Sarah Breeden said.
“But, we continue to monitor CCPs’ (central counterparties’) resources through ongoing data collection and supervision.”
“When we extend the stress test to include the cost of liquidating highly concentrated positions and more conservative assumptions, we identify some potential areas of vulnerability, which we will explore with CCPs as part of our ongoing supervision.”