Nikil Chande is a Director in the Financial Stability Department at the Bank of Canada. Nikil leads the team responsible for financial market infrastructure resolution and financial sector crisis preparedness. He obtained his law degree from the University of Toronto and his Masters in Economics from Queen’s University.
This report highlights how an effective resolution regime promotes financial stability. It does this by ensuring that financial market infrastructures (FMIs) would be able to continue to provide their critical functions during a period of stress when an FMI’s own recovery measures were failing. The report explains the Bank of Canada’s new role as the resolution authority for FMIs, which will further bolster financial system resilience.
This paper proposes a practical approach to address the procyclicality of initial margin at central counterparties (CCPs) that can work even in periods of extreme stress. The approach allows CCPs to limit the speed of margin increases resulting from spikes in market volatility.