Overnight heroes: central banks weigh loans for CCPs
If a clearing house runs into trouble, its first phone call will be to commercial providers of liquidity. Its second – and last – option is to turn to the central bank. That is an arrangement some central banks have been willing to formalise. But not others. Cécile Sourbes reports
Clearing houses can be separated into haves and have-nots. The first group, which includes Eurex, LCH.Clearnet's French subsidiary, and Singapore Exchange (SGX), knows that in the event of a temporary, but large, cash shortfall, it can obtain emergency liquidity support from its central bank. The have-nots hope they could do the same, but their own central banks refuse to make a public commitment, and – in the eyes of some clients – that puts them at a disadvantage.
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