Summary compliance report : February 2023 : recommandation of the European Systemic Risk Board of 25 May 2020 on liquidity risks arising from margin calls (ESRB/2020/6) - sub-recommandations B(1) and D(1)

On 25 May 2020, the European Systemic Risk Board (ESRB) issued Recommendation ESRB/2020/6 aimed at addressing the liquidity risks potentially arising from margin calls (the "Recommendation"). The Recommendation consists of its component Recommendations A, B, C and D. Each of these Recommendations contains sub-recommendations (the "subrecommendations"), aimed at: (i) limiting cliff effects in relation to the demand for collateral, including in connection with client clearing services and non-centrally cleared markets; (ii) enhancing central counterparty (CCP) stress test scenarios for the assessment of future liquidity needs; (iii) limiting liquidity constraints related to margin collection; and (iv) promoting international standards related to the mitigation of procyclicality in client clearing services. Although not legally binding, recommendations issued by the ESRB are subject to an "act or explain" mechanism in accordance with Article 17 of the ESRB Regulation. The addressees are therefore under an obligation to inform the European Parliament, the Council of the European Union, the European Commission and the ESRB of the actions they have taken to comply with the recommendations, or to provide adequate justification for inaction.