ESMA Highlights Lessons From Global CCP Fire Drill

The European Securities and Markets Authority said a global central-counterparty fire drill has produced recommendations for improving default-management readiness across cleared markets.

The exercise, conducted in November 2025, involved 38 central counterparties from around the world together with clearing members. It simulated the failure of a hypothetical common participant under the CCP Global International Default Simulation framework.

ESMA participated in the lead authorities group alongside the Bundesbank, BaFin, the Commodity Futures Trading Commission and the Bank of England. The group helped design the exercise, monitored its execution and surveyed participants to draw lessons for future tests.

ESMA said the report points to several areas for further progress, including reducing fragmentation in CCP procedures and communications, promoting greater use of portal-based solutions, making porting tests more realistic, and considering a voluntary market-stress overlay for a future exercise.

Why it matters

Clearing is core market infrastructure for futures, options and many derivatives. Traders usually see only the front-end order ticket, but the ability of CCPs and clearing members to coordinate during a default can affect margin, porting, liquidity and confidence during stressed markets.

For active derivatives traders, the practical takeaway is that regulators are still testing whether default-management processes work across borders and across multiple clearing houses at the same time.

What to watch next

Watch whether future CCP fire drills add the proposed market-stress overlay and whether clearing houses standardize more communication channels, operational timelines and porting procedures before the next global exercise.