Hammer horror: banks fear CCP auctions after Nasdaq

Auction failure at Nasdaq sparks debate over who gets to bid on portfolios, and whether they should be pre-hedged

Risk 0319 In-depth illo
Mark Long/nbIllustration

When a garden-variety default at Nasdaq Clearing turned into a nine-figure loss, it focused industry minds on the arcane mechanics of CCP default auctions – an important process that is often drowned out by more high-profile rows between central counterparties (CCPs) and their members.

“[This event] brings everyone’s processes and procedures back into focus,” says a CCP expert who took part in the default auction at a large clearing house for certain of Lehman Brothers' assets after the bank's

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