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.

Buy-side battle

Central clearing has dominated the agenda of credit derivatives dealers this year. With regulators pushing for buy-side firms to have access to clearing platforms, dealers and clearing houses are finding there is a great deal of work still to be done…

A state of flux

Efforts to improve the risk architecture for the derivatives business in Asia appear more muted than elsewhere, with many regulators in the region taking a wait-and-see approach towards central counterparty. But, as Duncan Wood reports, there are some…

Get connected

Regulatory demands for the derivatives industry to improve operational efficiency have become increasingly stringent in the past year. To meet the targets, dealers say interoperability between technology platforms is vital. But in the competitive vendor…

The bespoke conundrum

The dealer community has pushed towards standardisation of credit default swaps contracts, enabling them to meet a regulatory goal of ensuring a large chunk of the credit derivatives market is cleared through central counterparties. What implications…

Piloting policy

The privately negotiated derivatives industry congregated in Beijing last month for the International Swaps and Derivatives Association's annual general meeting. Top of the agenda were efforts to formulate a strategic response to calls for more…

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