Risk Annual Summit: No answers on how to cope with CCP default, says Pearson

Regulators are looking at how financial markets could be proofed against the collapse of a CCP – but there are more questions than answers at the moment, says the EC’s Patrick Pearson


Regulators are worried about the impact a central counterparty (CCP) default would have on financial markets, but detailed proposals are some way off, according to Patrick Pearson, head of the financial markets infrastructure unit at the European Commission (EC).

Speaking at the Risk Annual Summit in London this morning, Pearson said regulators are keenly aware of the damage that could be caused by a CCP default, and are using the example of Hong Kong – where the local clearing house collapsed

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

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The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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