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.
The CCP price: users fear modelling mishaps
The CCP price
European CCP rules stricter than US, says Eurex Clearing chief
Thomas Book, chief executive of Eurex Clearing, says it remains to be seen whether the standards for central counterparties set in Europe will be matched around the globe
CCP regulation needs to be regional, not national: SGX
SGX head of clearing risk urges greater cooperation among region's regulators
Upfront on clearing
Sponsored forum: OTC derivatives clearing
Why CCPs are the new rating agencies – and pose the same risks
A clear alternative?
CCPs in Japan, Mexico, Singapore and US to jump through Esma hoops
Eleven CCPs say they will apply to Esma for approval – sparing European members a capital hit – but Canada's CDCC has no plans to go through the process
CPSS, Iosco and FSB publish reports on FMIs
CPSS and Iosco says member states are making ‘substantial progress’ towards establishing their principles for financial market infrastructures
RBI policy document pushes CCIL closer to QCCP status
Indian regulator takes explicit responsibility for supervising the Mumbai-based clearing house
Covered bond industry protests against Esma clearing push
Esma has ignored calls to exempt covered bond vehicles from clearing, to the dismay of issuers
CME vs LCH.Clearnet: Clients may face CCP-specific pricing, warn FCMs
The two biggest clearing houses for interest rate swaps, CME and LCH.Clearnet, have different margin models – which may affect the prices charged to clients by clearing members. It could also affect the contest between the two venues. Joe Rennison reports
FX could move to financial settlement under clearing pressure – GFXD’s Lam
Addressing the challenges of clearing deliverable foreign exchange products, Mandy Lam of the Global Financial Markets Association suggests more products could become financially settled in the future
Basel tries to create clearing pull with new capital rules
Dealers say rules for default fund exposures are an improvement, but risk weights are not tied to "real default probabilities"
Lack of local currency OIS markets problematic for Asia banks
The move towards OIS discounting is proving difficult enough for banks in US and European markets but firms in Asia are facing the added difficulty of a dealing with multiple currencies
ASX and LCH battle for Australian clearing market
Two's a crowd?
Banks tout alternative to calculate CCP default fund capital charge
Dealers push for a more risk-sensitive model, but regulators may opt to incorporate a new non-internal modelled approach into the existing hypothetical capital method
OTC Derivatives Clearing Summit: Bank examiners will push dealers away from bespoke trades, says Fed
Supervisors should ask dealers to prove they are favouring standardised products, says Fed official
IASB eases fears over hedge accounting for CCP novations
Standard-setter decides trades can still qualify for hedge accounting when voluntarily novated to a CCP, but experts warn wider stance on novation could cause trouble
Risk’s OTC clearing survey
In this video, Nick Sawyer talks to Risk’s editor, Duncan Wood, about clearing mandates in the US and a new Risk survey on client clearing
The end of the waterfall: Industry faces up to CCP recovery and resolution
The end of the waterfall
OFI Asset Management: Cutting the costs of clearing
Early adopters of over-the-counter derivatives clearing tended to be the big beasts of the buy-side universe, but smaller firms – such as France’s OFI Asset Management – are coming on board as well. By Tom Osborn
US-European divergence over default funds
Quotes of the quarter