The latest stress test conducted by the Bank of England on major UK clearing houses has revealed that these institutions demonstrate resilience under severe market conditions but also exhibit vulnerabilities related to highly concentrated positions.
The stress test evaluated ICE Clear Europe Ltd., LCH Ltd., and LME Clear Ltd. by simulating scenarios that included the potential default of two or more members.
The findings emphasize the need to address concentration risks within these clearing houses in order to maintain stability in the financial system. The results are part of the Bank's ongoing efforts to monitor and strengthen central counterparties in response to evolving market dynamics.