ESMA issues CCP resolution guidance on write-down and conversion
ESMA published a resolution briefing for CCPs providing guidance to National Resolution Authorities on operationalising the write-down and conversion of instruments tool.
ESMA's guidance clarifies how NRAs should apply the WDCI tool in CCP resolution. This strengthens the EU CCP resolution framework but signals greater loss-absorption risk for clearing members and clients in stress scenarios.
Direct implications for clearing members' capital, collateral, and counterparty risk management under CCP recovery and resolution.
Action Required
Reassess CCP exposure, default fund contributions, and recovery/resolution playbooks in light of new WDCI operational expectations.
CCP resolution mechanics are systemically critical; WDCI operationalisation alters loss allocation expectations for participants.
Update CCP counterparty risk assessments to reflect WDCI applicability. Stress test potential losses from write-down/conversion under resolution and confirm coverage within recovery plans and risk appetite.
“ESMA published a resolution briefing for CCPs providing practical guidance to NRAs on operationalising the write-down and conversion of instruments tool (WDCI).”
Published: 2026-05-13