A central counterparty must—
| (a) | in determining its liquidity needs, consider the other roles a clearing member may play within the central counterparty, such as a settlement bank, custodian or liquidity provider; |
| (b) | reduce the liquidity demands of its clearing members by providing its clearing members with sufficient information or control systems to help them manage their liquidity needs and risks; |
| (c) | have effective operational and analytical procedures to identify, measure, and monitor its settlement and funding flows on an on-going and timely basis, including its use of intraday liquidity; |
| (d) | have in place policies, processes and procedures to— |
| (i) | capture any relevant liquidity transfer restrictions; |
| (ii) | monitor the rules and regulations in the jurisdictions in which it operates or in which it holds highly liquid securities, and to assess the liquidity implications for the group as a whole; |
| (e) | where it has access to central bank accounts, payment services, or securities services, use these services, where practical, to enhance its management of liquidity risk; |
| (f) | determine the amount and regularly test the sufficiency of its liquid resources through rigorous stress testing; |
| (g) | have clear procedures to report the results of its stress tests to appropriate decision makers at the central counterparty and to use these results to evaluate the adequacy of, and adjust where necessary, its liquidity risk management framework; |
| (h) | establish explicit rules and procedures that— |
| (i) | enable the central counterparty to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations on time following any individual or combined default among its clearing members; |
| (ii) | address unforeseen and potentially uncovered liquidity shortfalls; |
| (iii) | disallow unwinding, revoking, or delaying the same-day settlement of payment obligations; |
| (iv) | indicate the central counterparty’s process to replenish any liquidity resources it may employ during a stress event, so that it can continue to operate in a safe and sound manner; |
| (v) | address fully any credit losses it may face as a result of any individual or combined default among its clearing members with respect to any of their obligations to the central counterparty; |
| (vi) | address how potentially uncovered credit losses would be allocated, including their payment of any funds a central counterparty may borrow from liquidity providers; |
| (i) | document its supporting rationale for, and must have appropriate governance arrangements relating to, the amount and form of total liquid resources it maintains; |
| (i) | it at all times has access to adequate liquidity to perform its functions, services and activities; |
| (ii) | it obtains the necessary credit lines or similar arrangements to cover its liquidity needs in case the liquidity resources at its disposal are not immediately available; |
| (iii) | a clearing member, parent holding company or subsidiary of that clearing member together does not provide more than 25% of the credit lines required by the central counterparty; and |
| (iv) | it continuously measures its potential liquidity needs, taking into account the liquidity risk generated by the default of at least the two clearing members to which it has the largest exposures. |
