CCP
WHAT IS THIS? A central counterparty (CCP) manages default risk by collecting initial and variation margin from both parties to a trade. Spill-over losses are absorbed via a default fund to which all members contribute – introducing a degree of mutualised risk – and by the CCP’s own capital. The concept is an old one that was extended to over-the-counter derivatives in the aftermath of the financial crisis.
Clearing houses in Asia to overhaul creaking margin models
Fears of Nasdaq-style failures spur rethink of margining practices at HKEx, JSCC, SGX
SGX to exit swaps clearing business
Decision will leave some contracts without a CCP from next April
Industry fears EU ‘Google tax’ will hit trading venues, CCPs
Broad wording of digital services tax could place market infrastructure in firing line
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
The aftershocks of Einar Aas
Energy could be particularly badly affected by the €114m default of Nasdaq power trader Einar Aas
BlackRock, risk models and regulatory relief
The week on Risk.net, October 20–26, 2018
Emir compels clearing surge
Share of cleared interest rate derivatives climbs to 58%
Exchange chiefs back Giancarlo in tussle over CCP oversight
The CFTC may block US CCPs from acceding to EU supervision
Basel to propose IM offset in leverage ratio
Four sources say draft will make concession; it could also revive EU-US segregation drama
Lessons from two commodity defaults
Regulators and exchanges need to learn from the Greenhat/PJM and Norwegian Nasdaq defaults
LCH units bolster liquidity buffers
Cash at central banks and with commercial banks higher in the second quarter
Brexit OTC mutation, chaperones and SA-CCR
The week on Risk.net, October 6–12, 2018
Searching for the end of Giancarlo’s white-paper trail
CFTC chairman faces key test to turn thought leadership into real reform
Let regulators manage no-deal risks
EU can stop swaps market falling over a Brexit cliff – and EU firms will be biggest losers if they don’t act
Stuck in traffic: EU turf war holds up CCP resolution rules
Unsuitable rules for failed banks could be used to resolve French and German clearing houses
NSCC posts $137m margin breach
Securities CCP records largest margin shortfall since public disclosures began
Unfinished business: US Treasuries reform stalls
Efforts to improve clearing and settlement of US government debt – and oversight of who trades it – still incomplete
FICC concentration risk ebbs
Open positions in government securities held by ten largest clearing members falls to 37%
EU clients face axe from UK CCPs
But Esma’s Maijoor offers lifeline, calling for continued access for EU members
Q&A: CFTC’s Giancarlo on the race to overhaul cross-border rules
New Sef rules imminent, but deference to foreign regulators may not be completed by 2020
Paypals: Eurex members await their pay day
Profit-sharing scheme has created more competitive swaps landscape
Banks cry foul over LCH compression policy changes
Allocation of compression slots favours TriOptima over competitors, critics say
Skin in the game
This paper analyzes the cost of putting aside capital as skin in the game (SITG).
CFTC’s cross-border clearing plan faces long haul
US clients warned not to expect access to foreign exempt CCPs for at least a year