No easy fix for CCP investment loss issue, banks fear
UK-based CCPs have to pass investment losses to members and BoE says it would be logical for returns to be shared as well. But market participants say that will not win CCP shareholder support
Proposals designed to ease clearing member concerns about their exposure to clearing house investment losses are unworkable, according to market participants.
Recent rule changes at UK-based central counterparties (CCPs) LCH.Clearnet and Ice Clear Europe – a result of new UK laws – require clearing members to bear the brunt of investment losses once the capital a clearing house has allocated to these losses has been depleted. At LCH.Clearnet, this buffer amounts to €15 million.
CCPs invest
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