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.

Timing tension – Europe clearing deadline set to slip

Mandatory clearing in Europe is widely expected to start from next year, but the complex authorisation process, combined with the variety of collateral segregation models, means the start date for some clients could be much later. Tom Osborn reports

Clearing: Third time lucky

The third US clearing deadline caused relatively little fuss. But the problems that emerged ahead of the first two deadlines haven’t entirely been solved, and some firms sought to postpone their first cleared transactions. Joe Rennison reports

Politically motivated reform creates new risk

Many of the proposed reforms in derivatives market regulation were driven by politics rather than economics. This could lead to an additional source of systemic risk and less effective risk management among end-users, argues David Rowe

ECB’s Russo speaks on CCP policy

Daniela Russo, Director General Payments & Market Infrastructure at the European Central Bank, talks about regulation affecting the operation of central counterparties for OTC derivatives transactions

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