Shift to clearing presents CCP system challenges

The launch of new central counterparties across the globe presents huge opportunities for providers of risk management and trading systems focused on this sector. What functionality do these systems provide – and would they meet the requirements of clearers during a default event? Clive Davidson reports

There is a lot resting on the success of central clearing. Regulators are banking on it to help eradicate one of the major risks exposed by the financial crisis – a systemic failure caused by the collapse of a major, interconnected counterparty. But in mandating greater use of central counterparties (CCPs), many regulators also recognise they have shifted systemic risk from a group of large counterparties to a very small number of clearing houses – and they want to make sure they are rock-solid