The debate over CCP central bank liquidity

Some regulators believe central counterparties (CCPs) clearing over-the-counter derivatives should have access to central bank liquidity in the same currency as the product being cleared. But central banks are reluctant to provide such support and CCPs say they can manage without it. How will the legislation unfold? Joel Clark reports

The push to move a portion of the over-the-counter derivatives market on to central counterparties (CCPs) has thrown up a number of technical and controversial issues, often with no obvious solution. As legislators around the world have drafted rules that will require contracts to be cleared through CCPs wherever possible, virtually every element of the clearing process, from margin requirements and default fund contributions to governance and supervision, has been exposed to scrutiny and debate