LCH warns on CCP ‘auction risk’

CCP stress tests should consider possibility of failed auctions

LCH.Clearnet building London
LCH headquarters

The odds of a clearing house failing to effectively offload the positions of a defaulting member should be factored into international standards on stress testing and capital adequacy for central counterparties (CCPs), according to LCH.Clearnet.

The Bank for International Settlements (BIS) is developing a standardised stress test for CCPs at the behest of global banks and regulators. LCH issued a white paper last week, which called for auction risk to be incorporated into the standardised stress

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