Journal of Financial Market Infrastructures

“Incomplete demutualization” and financial market infrastructure: central counterparty ownership and governance after the crisis of 2008–9

Robert T. Cox and Robert S. Steigerwald

  • The demutualized CCP model has led to a state of adversarial tension between CPPs and their clearing members.
  • Failure to strengthen a mature and responsible working relationship in CCP governance may result in continued antagonism over particular aspects of CCP risk management.
  • While some issues may be resolved by regulatory fiat, the fundamental conflict can only be resolved by clearing members' acceptance of their critical role in risk mutualization.


In this paper, we examine a key conflict between the owners and clearing members of "demutualized" central counterparties (CCPs), in which ownership is separated from clearing participation. Despite the advent of demutualization in the early 1990s, clearing members remain the ultimate underwriters of CCP default risk, a situation we describe as "incomplete demutualization". Fundamental changes in regulatory and financial stability policy in thewake of the crisis of 2008-9 have led clearing members to reassess their role in CCP default management. This, in turn, has led to skirmishes between some CCPs and clearing members over a variety of risk-related issues. Policy responses to this conflict should focus primarily on the incentives of both CCPs and clearing members to participate collaboratively in CCP default management, and on the overall resilience of central clearing arrangements. Continued conflict over governance may make it impossible for a CCP in crisis to recover and may also hinder resolution efforts.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here