Europe leaves IM haircutting in CCP recovery crosshairs

Central question: should CCPs be allowed to apply haircuts on clearing members' IM contributions?

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Proposals from the European Parliament could leave central counterparties with the power to dip into the initial margin accounts of clearing members during a crisis. Members of CCPs say it could lead to a rush for the exits following signs of impending failure and scupper the chances of a recovery or orderly resolution.

On January 24, the European Parliament agreed a final compromise text outlining the procedures for a CCP in crisis, known as the CCP recovery and resolution regulation. Central

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