After Nasdaq, cracks appear in foundation of clearing

Default fund loss triggers debate on risk sharing, auction rules and ‘skin in the game’ at CCPs

Risk sharing is the foundation of central clearing. If it all goes wrong, and a defaulter can’t pay for its own losses, then everyone else chips in via a prepaid fund.

So, it’s probably no surprise that in the aftermath of last month’s default at Nasdaq Clearing – which left members to mop up losses of €107 million ($122 million) – some firms are wondering whether they really do have to share risk with everyone else. Perhaps a segregated default fund, that excludes certain firms or products,

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