Global CCP default simulation tests client porting, finds friction
Thirty-eight central counterparties (CCPs) and their members conducted the largest-ever global default simulation in November 2025. The exercise, coordinated by CCP Global, tested operational capabilities and identified areas for improvement in default management processes.
Largest-ever drill tests client porting
In November 2025, 38 central counterparties (CCPs) and their members participated in the largest-ever CCP Global International Default Simulation (CIDS) exercise.
This fire drill, coordinated by industry body CCP Global and overseen by five Lead Authorities, tested the ability of CCPs and clearing members to manage the default of a hypothetical common clearing member across various asset classes, including commodities, equities, interest rate swaps, credit default swaps, and FX.
A key new element in the 2025 drill was the inclusion of a 'Client Porting' module, which simulates the transfer of a client's portfolio from a defaulted clearing member to a surviving one.
This module, aimed at preserving client assets and reducing the CCP's management burden, was well-received, with most CCPs opting to include it.
Multi-CCP fire drills, occurring biennially since 2016, are crucial for rehearsing default management procedures and identifying system-wide operational bottlenecks.
Resource strains and communication gaps
Despite overall successful execution of default management processes, CIDS 2025 highlighted several operational pressure points.
Firms with multiple responsibilities and CCP memberships reported challenges in simultaneously meeting all obligations, though some noted improved capacity since 2023.
Resource constraints, particularly competing priorities and the availability of experienced traders for CCP hedging activities, were a main concern.
Participants also called for greater harmonisation in communication during the exercise, specifically regarding auction file formats, bidding processes, and the speed of feedback on key outcomes.
Inconsistencies in bidding conventions across CCPs were also noted.
Realism needed for future drills
Future CIDS exercises should prioritize enhanced scenario realism to maximize preparedness.
Participants called for more diverse defaulter portfolios, the inclusion of stressed market prices, and a deeper simulation of client porting, including AML/KYC considerations.
This continuous refinement of global default drills remains crucial for identifying and addressing system-wide vulnerabilities that individual tests might miss.