CCP
WHAT IS THIS? A central counterparty (CCP) manages default risk by collecting initial and variation margin from both parties to a trade. Spill-over losses are absorbed via a default fund to which all members contribute – introducing a degree of mutualised risk – and by the CCP’s own capital. The concept is an old one that was extended to over-the-counter derivatives in the aftermath of the financial crisis.
I want security: stylized facts about central counterparty collateral and its systemic context
In this paper, the authors introduce the principal policy issues affecting CCPs and collateral and then use these disclosures to contextualize some stylized facts that may aid in understanding and addressing the policy issues.
Dealers urge further clarity on rules for ailing CCPs
New European rules stop short of defining resolution triggers
Banks and CCPs clash over non-default losses
Banks balk at being on the hook for losses from investments or cyber attack, but many clearers say the risk should be shared
Clearers laud EC transition extension for non-EU CCPs
Absent the extension, OCC estimates extra $74 billion in RWAs for European members
Indian CCP equivalence push hits data protection roadblock
CFTC demands India’s clearing house hand over information on trades involving US persons
SGX rules out VM haircutting in recovery planning
Hitting variation margin "inappropriate" in Singapore context, but some bankers support its use
Suspend bank capital rules following an FCM default, CFTC told
Banks may be more likely to bid in post-default auctions if temporary capital relief is granted
CCP default risks not correlated, CFTC finds
Timothy Massad: stress tests reveal “quite a bit of diversification” in CCP exposures
Simulated banking system shows pros and cons of Basel III
Stability improves, but higher capital requirements also cut lending in new research
A referendum on clearing
Brexit margin calls show swaps CCPs are relying on funding strength of a handful of banks
Huge Brexit margin calls stoke intra-day funding fears
Calls on June 24 may have topped $40 billion; critics urge regulators to review episode
LCH to revise margining after Brexit backlash
Excess intra-day margin will offset other collateral calls from November 3
CCPs defend direct clearing models for the buy side
FCMs unsure if direct margin posting will deliver capital savings
LCH under scrutiny after outsized Brexit margin calls
Intra-day calls criticised by banks; FIA working group pushing for change
Emir review could enable EU clearing land grab
Experts say 2015 ECJ ruling may not protect London euro clearing if the UK leaves the European Union
Asset managers lead the charge for voluntary clearing
Voluntary clearing volumes jump 80% as non-cleared margin rules take effect
CFTC ‘puzzled’ by CPMI-Iosco plan on margin procyclicality
Prescriptive models could increase systemic risk at CCPs, market participants warn
Margin rules lead to NDF clearing surge
Banks look to finally clear forex products, but options remain a challenge
Loan danger: CFTC sees systemic risk in margin financing
Combination with net margin posting at EU CCPs could leave clearing members on the hook
Dependence on collateral raises vital research questions
Areas of focus should include collateral supply, reuse and circulation
EU net margin rules are riskier than US regime, warns CFTC
Commission’s Bandman raises margin financing as emerging systemic risk to CCPs
Margin rules push interdealer inflation swaps to clearing
Traders say 95% of the market now cleared, compared with 10% a month ago
Year-end deadline for fixing CCP recovery plans 'not realistic'
Some central counterparties are unable to maintain a continuous 'cover two' standard
HKEx: real-time settlement key to cross-currency swap clearing
JSCC and KRX also said to be working on cross-currency swap clearing offerings