The UK is proposing legislative solvency changes to protect central counterparties from risk transfer should a member default
LONDON – The UK Treasury has published a consultation paper of proposed reforms to Part 7 of the 1989 Companies Act, modifying general solvency law to protect central counterparties – such as clearing houses and exchanges.
The paper, Modernising the insolvency protections for the operation of financial markets – proposals to reform Part 7 of the 1989 Companies Act seeks to protect clearing houses and exchanges from risk transfer, should one of their members default.
Current legislation does not recognise the commonly used ‘default funds’ used by clearing houses to offset losses of a defaulting member or the range of contracts now cleared by central counterparties.
The proposals would expand the definition of market contracts, make allowances for default funds, and address technical issues arising from ‘client accounts’ across national jurisdictions. The Treasury has set an October 16 deadline for responses.
More on Risk Management
This issue of The Journal of Risk Model Validation commences with a paper by Pilar Abad, Sonia Benito Muela and Carmen López Martín entitled "The role of the loss function in value-at-risk comparisons",...
ABSTRACT We demonstrate how introducing economic variables into a credit scorecard improves the predictive power of that scorecard. Such a scorecard can forecast default rates accurately, even when economic...
ABSTRACT In this paper, we discuss the evolution of the financial economic events that preceded the triggering of the subprime crisis. This crisis shares similarities with episodes that occurred in the...
ABSTRACT This paper examines whether the comparison of value-at-risk (VaR) models depends on the loss function used for such a purpose.We showa detailed comparison for several VaR models for two groups...
Sign up for Risk.net email alerts
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.