Shift to clearing presents CCP system challenges

A clear challenge

There is a lot resting on the success of central clearing. Regulators are banking on it to help eradicate one of the major risks exposed by the financial crisis – a systemic failure caused by the collapse of a major, interconnected counterparty. But in mandating greater use of central counterparties (CCPs), many regulators also recognise they have shifted systemic risk from a group of large counterparties to a very small number of clearing houses – and they want to make sure they are rock-solid