Buy side steers clear of CCPs

Central clearing has been one of the major policy initiatives by regulators since the crisis began. Following the bankruptcy of Lehman Brothers in September 2008, escalating market fear made central clearing for over-the-counter derivatives look like the perfect solution to counterparty risk. While market participants would retain the ability to execute trades in the OTC market, clearing them via a central counterparty (CCP) would reduce the risk of a major dealer going under, many believed.

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