1 Introduction

Ladies and gentlemen, on behalf of the Deutsche Bundesbank, the European Central Bank and the Federal Reserve Bank of Chicago, I would like to thank you for taking part in the Fifth Joint Conference on CCP Risk Management.  

A very interesting conference day with lively debates on current and future challenges in CCP risk management is coming to an end. I now have the honour of concluding today’s conference.

2 Crisis becomes our new reality – CCPs and market participants will have to prepare for it

We are still facing highly challenging times, characterised by several crises and other unfavourable developments: the pandemic, the energy crisis, the war in Ukraine, high inflation… and those are just the most recent ones.

But, as Max Frisch stated: Crisis is a productive state. One just has to remove the taste of catastrophe from it. It is always a matter of the right perspective.

Stormy waters are the new normal. For CCPs and market participants, difficult situations have also had positive side effects because they have also brought about some positive change, which we have discussed to some extent today.

Moreover, it has become abundantly clear that it is important to work jointly on future challenges and to prepare adequately for them.

With this in mind, allow me to briefly walk you through today’s topics and highlight a few key takeaways that deserve further consideration and elaboration.

Today’s conference focused on three broader topics covered in separate sessions: central clearing in a new technology environment, the state of clearing in energy markets and CCP governance. 

Our first topic today addressed central clearing in a new technology environment. Since the pandemic, technological progress has accelerated immensely, including CCPs. Digital assets, distributed ledger technology, artificial intelligence and cloud technology have the potential to transform the post-trading space significantly. 

The integration of new technologies holds immense promise for central clearing, bringing with it automation, operational efficiency and enhanced risk management. 

However, such integration also comes with new risk implications, and it is essential to adequately capture the risks arising from new technologies in central clearing operations. Any potential regulatory gap needs to be addressed to ensure the safety and stability of the financial system. 

Cooperation between regulatory bodies and market participants is important to establish frameworks that foster innovation while maintaining oversight. Additionally, regulation needs to account for the cross-border dimension of new technologies in the automation and integration of central clearing operations.

Looking ahead, we must also consider the environmental impact of central clearing operations. Sustainability is no longer a choice; it is an imperative. For this reason, clearing operations must align with environmental objectives and embrace green transitions. 

In conclusion, the convergence of new technologies and central clearing offers opportunities for resilience and innovation. By embracing innovation, we can unlock the potential for a sustainable and technologically advanced future in central clearing operations. 

Our second topic revolved around energy markets and central clearing. There have been significant challenges in the energy markets, particularly during the turmoil experienced in the wake of the war in Ukraine. The unprecedented market volatility tested the resilience of energy markets and its participants and once again shed light on the need for robust risk management practices and effective regulatory oversight.

The implications of the energy crisis for the clearing market are far-reaching. Increased volatility, supply chain disruptions and price spikes have raised questions about the adequacy of risk management models and mechanisms. It is crucial for market participants to understand the implications of these events and explore measures to stabilise and improve the effectiveness of energy markets. 

Looking ahead, we must focus on building a more resilient and sustainable energy market. To achieve this, energy markets will undoubtedly need to undergo major changes. CCPs could play a significant role in contributing to the transition in the energy markets. The transition to a low-carbon economy might give rise to unforeseeable developments, consequently leading to frictions or unexpected movements. However, CCPs have to ensure the smooth functioning of the financial markets at all times, even during the transition period.

Let us seize this opportunity to learn from the lessons of the past and work collaboratively towards establishing a more stable and sustainable energy market.

In our last panel, we discussed an essential aspect of CCP risk management: CCP governance. As the financial landscape evolves, it is crucial to ensure robust governance frameworks that promote stability, transparency, and accountability. Today, we gained insights from experts across the United States, Europe and Asia to identify common ground for best practices for CCP governance. 

In Asia and Europe, various governance rules and proposals have been implemented to guarantee the effective oversight of CCPs. Similarly, in the United States, regulatory bodies have proposed regulations to enhance CCP governance. These efforts aim to address issues and gaps that have been identified in the current governance policies of CCPs.

One crucial aspect of CCP governance is the role of risk committee members. This group represents the firm’s interests, ensuring the stability of the CCP, and in some cases, safeguarding the broader financial system. That raises some questions, namely should the risk committee be a board committee? And should the risk committee act in the interest of the CCP’s shareholders, the shareholders of the clearing member or end user, or the stability of the broader financial system?

There is no one answer to these questions. In weighing the advantages and disadvantages of each approach, it is essential to consider the specific context and structure of each CCP. What works well for one may not necessarily be the best approach for another. Striking the right balance between direct board involvement and independent risk oversight is key, taking into account the unique circumstances of each organisation.

As you can see, CCP governance is a complex and critical issue. Through today’s discussion, we aim to identify best practices and common ground across different regions. By enhancing CCP governance, we can strengthen the stability and integrity of the financial system going forward. 

3 Farewell

Ladies and gentlemen, colleagues, thank you again for taking part in today’s conference and making it such a success. I am convinced that today’s conference has delivered what it set out to achieve.

However, it is not the institutions themselves that make things work, it is the people behind the big names. My special thanks go out to the organising team from the ECB, the Chicago Fed and my Bundesbank colleagues. 

Thank you very much for your participation. Have a wonderful evening and for those of you travelling home, have a safe journey.

We look forward to welcoming you at our next CCP conference.