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Title
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Risk management practices of central counterparties : European vs. third-country CCPs
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Author
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Abstract
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| As central counterparties can act as shock absorbers but may also lead to financial stability problems themselves, this paper explores the financial risk management practices of central counterparties around the world. Furthermore, we compare European with third-country CCPs to see whether different risk management practices are being applied. Our results indicate that CCPs in the EU require more money to be deposited at a central bank of issue as initial margins compared to non-EU CCPs. The former also demand a higher fraction of prefunded clearing member contributions. In addition, asset segregation is more common at EU CCPs. In terms of investment risk management, EU CCPs prefer to deposit cash at central banks, while non-EU CCPs tend to have cash deposits at commercial banks. European CCPs have almost three times as many liquid resources as non-EU CCPs. |
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Language
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English
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Source (journal)
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Journal of insurance and financial management
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Publication
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2022
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Volume/pages
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6
:2
(2022)
, p. 125-161
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Full text (open access)
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