Buy side urged to share risk of CCP collapse
Clients – not just banks – should be exposed to the risk of a clearing house collapsing, according to BlackRock and Citadel
BlackRock and Citadel say buy-side firms should accept some degree of exposure in the event of losses overwhelming a central counterparty (CCP), to ensure all participants have an incentive to behave responsibly. That could include having their variation margin payments cut – one of a range of measures now being considered by regulators and CCPs as a way of recovering a clearing house if its other financial resources are wiped out.
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