BoE publishes policy statement on CCP discretionary payments

Following its consultation, BoE has published a policy statement (SoP) setting out its final approach to the power to temporarily restrict or prohibit discretionary payments by CCPs to ensure continuity of critical clearing services. The SoP will come into effect from 16 February 2024.

The SoP clarifies the factors BoE may consider when assessing the statutory conditions for the use of the power, the circumstances that could lead to those conditions being deemed to be met, and the process for giving any direction under the power. It also sets out BoE’s approach to using the power to support its objective to enhance UK financial stability by ensuring the continuity of critical clearing services.

BoE received two responses to its consultation – respondents were generally supportive of the proposals, with some requesting additional clarification around the scope and duration of the power. BoE has made two minor changes to the SoP, it has:

• clarified that five years is the maximum duration of the power (not a minimum) and that the power is to be used in severe circumstances only (not in BoE’s BAU supervisory response); and
• considered the impact that exercising the power would have on a CCP’s ability to hire and retain key staff needed to ensure the continuity of critical services.