EU watchdog says clearing houses resilient, tougher daily checks needed

LONDON, April 29 (Reuters) - Clearing houses for derivatives in the European Union must use tougher assumptions when checking their daily resilience to defaults of members and market shocks, the bloc's securities watchdog said on Friday.

The European Securities and Markets Authority (ESMA) was publishing the results of its first annual region-wide "stress test" that covered 17 clearing houses in the EU.

The aim is to see how well the sector could withstand many members, typically banks, defaulting at the same time without destabilising the financial system or needing taxpayer bailouts.

Clearing houses or central counterparties (CCPs) are set to grow as regulators make clearing in the $550 trillion derivatives market mandatory, raising concerns of a new breed of "too big to fail" institutions.

Clearing houses like LCH.Clearnet, Eurex Clearing and ICE Clear Europe stand between two sides of a trade to ensure its completion even if one side goes bust.

"The results of the test shows that the system of EU CCPs can overall be assessed as resilient to the stress scenarios used to model extreme but plausible market developments," ESMA said in a statement. (Reporting by Huw Jones, editing by Carolyn Cohn)