Clearing members fear $5 billion intra-day funding burden

The intra-day funding burden


It's a clearing house risk manager’s nightmare – a day has passed since it last collected margin from its members, markets have tanked, and there is a margin gap that won’t be filled because two member firms have filed for bankruptcy overnight. To cover the losses, the central counterparty (CCP) will have to draw on the initial margin reserves posted by the defaulting firms, and if markets continue to swing, the damage could spill into the rest of the CCP’s default waterfall.

That’s why most

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As uncertainty surrounding Brexit continues and the impacts of Covid-19-driven market volatility are analysed, it is essential for banks and their end-users to understand their clearing options, and how they can achieve greater capital and cross…

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