Time for Stability in Derivatives Markets – a New Look at Central Counterparty Clearing for Securities Markets
AbstractThe recent financial crisis has driven many plans for improving the stability and resilience of the global financial system. One concept, managing the risk of default in securities or financial derivatives markets through central counterparties, receives scrutiny in this report. The author examines the role centralized clearing parties could play in improving system resilience. These centralized clearing parties are institutions that interpose themselves between counterparties in financial transactions. The author offers a new look at what these institutions could achieve in over-the-counter derivatives trading and short-term funding markets. He places the emphasis on the core services they could provide: the diversification of counterparty risk and the redistribution of default losses among its members.
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Bibliographic InfoArticle provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.
Volume (Year): (2011)
Issue (Month): 329 (May)
Financial Services; derivatives; securities markets; central counterparty clearing;
Find related papers by JEL classification:
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Koeppl, Thorsten V. & Monnet, Cyril, 2008.
CFS Working Paper Series
2008/42, Center for Financial Studies (CFS).
- David Longworth, 2010. "Warding Off Financial Market Failure: How to Avoid Squeezed Margins and Bad Haircuts," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 135, December.
- Angelo Melino, 2011. "Moving Monetary Policy Forward: Why Small Steps - and a Lower Inflation Target - Make Sense for the Bank of Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 319, January.
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