FIA Global issued a position paper to enhance the assessment and management of clearinghouse (CCP) risk. Among other things, FIA recommended that (1) clearing members’ and their clients’ ability to assess CCP risk should be enhanced through “consistent and transparent CCP disclosures;” (2) CCP initial margin levels should be “effective, transparent and predictable” and should be at adequate levels “to minimize broader consequences from a default;” and (3) CCP wind-downs and liquidations should be avoided by ensuring that CCPs maintain clearly defined loss allocation procedures and robust resolution plans. FIA Global also called for CCPs to “have sufficient capital and/or insurance to cover all non-default losses” and that cash calls or default fund assessment on clearing members in a default scenario should be limited. According to FIA Global, “[w]ith respect to default fund contributions, CCPs should be required to have sufficient capital and the ability to replenish CCP contributions for at least two defaults per clearing service within a defined period.” CCPs should contribute to their default funds in “an amount that is material to such CCP and also aligned with the amount of risk in the CCP’s system,” said FIA Global. In a default situation where a CCP’s default waterfall resources are inadequate, FIA Global recommended that gains haircutting should be used as a loss allocation tool, rather than initial margin haircutting or additional assessments beyond appropriately capped amounts. Both LCH and CME Group have previously issued their views on assessing and managing clearinghouse risk.