CCP resolution plans start to take shape
LCH.Clearnet's re-launched CDS clearing service adopts a loss-sharing mechanism - in line with a "last gasp of breath" approach outlined in an Isda letter to the Bank of England
LCH.Clearnet's credit default swap (CDS) clearing service, CDSClear, has become the second central counterparty (CCP) to adopt a new loss-sharing practice - a last line of defence if one or more clearing members default and other financial resources have been exhausted. The mechanism is designed to allow a CCP to get back on an even keel before a decision is taken to either close it down or replenish its resources, and could become a key element in regulation on clearing house resolution.
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