At first glance, it seems a familiar tale. A firm enters into a portfolio of derivatives trades with a counterparty, but the price soon moves against it. Having suffered tens of millions in mark-to-market losses on the trades, the firm calls its lawyers. Normally, the target of the resulting lawsuit would be the firm’s dealer – but in this case, it’s a central counterparty (CCP).
“It’s very unusual for market participants to sue an exchange or a clearing house for a faulty contract. I can’t