ESMA launches sixth stress test for central counterparties

The European Securities and Markets Authority (ESMA) has launched its sixth stress test exercise for Central Counterparties (CCPs), the EU's financial markets regulator announced on Thursday.

The exercise, mandated under the European Market Infrastructure Regulation (EMIR), aims to assess the resilience of CCPs to adverse market conditions and identify potential vulnerabilities. It also evaluates the aggregate effects of CCPs' recovery and resolution arrangements on EU financial stability, enabling ESMA to issue recommendations where necessary. Sixteen CCPs are participating, including all authorised EU CCPs and two UK-based Tier 2 CCPs.

Verena Ross, ESMA's Chair, emphasised the importance of the exercise: "In a world continuously challenged by multiple crises, stress test exercises are critical to ensure that financial market infrastructures have the necessary tools, resources and arrangements in place to be resilient."

Klaus Löber, Chair of the CCP Supervisory Committee, highlighted the expanded scope of this year's test: "This year's exercise onboards the Recovery and Resolution Component to measure the aggregate impact from the activation of CCPs' recovery and resolution arrangements."

The 2026 framework introduces four key components: a Credit Stress Test evaluating financial resource adequacy; a Concentration Risk Analysis assessing market impact from large position liquidations; a Reverse Stress Test to identify system breaking points; and a new Recovery and Resolution Component examining stakeholder impacts.

Developed with National Competent Authorities and the European Systemic Risk Board, which provided the adverse market scenario, the exercise complements daily stress tests conducted by individual CCPs.

ESMA will issue data requests in early May, with joint validation by NCAs. Final results are scheduled for publication in the first quarter of 2027.