Jerome Powell, a governor of the Federal Reserve System, called last week for consideration of “some sort of standardized approach” to stress testing of clearinghouses (commonly referred to as CCPs) to better assess their individual risk profiles as well as to better understand overall “system resiliency.” Although Mr. Powell acknowledged there was “some truth” to the concern that the move to central clearing may “further concentrate risk in the financial system,” he said this is not the intent. The intent is to reduce risk, he said, “through netting of positions, greater transparency, better and more uniform risk-management practices, and more comprehensive regulation.” Mr. Powell argued that “[u]derstanding the effect of …correlated stresses on a wide array of CCPs [is] important for ensuring overall system resiliency.” Mr. Powell gave his remarks last week in a presentation at the 17th Annual International Banking Conference in Chicago. In his speech, Mr. Powell also said that clearinghouses must ensure they maintain adequate liquidity and are transparent with their clearing members regarding stress-test results, margin models and default fund size.