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Got to be certain: The legal framework for CCP default management processes

Author

Listed:
  • Braithwaite, Jo

    (London School of Economics)

  • Murphy, David

    (Bank of England)

Abstract

Central clearing offers numerous benefits to financial stability including multilateral netting of cleared exposures and the centralisation of default management. These benefits explain the pivotal role of central counterparties (‘CCPs’) in the post-crisis derivatives market reforms. However they lead to a key financial stability question: will CCPs be able to manage a large member default effectively?

Suggested Citation

  • Braithwaite, Jo & Murphy, David, 2016. "Got to be certain: The legal framework for CCP default management processes," Bank of England Financial Stability Papers 37, Bank of England.
    • Handle: RePEc:boe:finsta:0037
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    File URL: https://www.bankofengland.co.uk//-/media/boe/files/financial-stability-paper/2016/got-to-be-certain-the-legal-framework-for-ccp-default.pdf?la=en&hash=BF98E1925781690046BC5BA59436730ECD4C6BEC
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    Citations

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    Cited by:

    1. Darrell Duffie, 2018. "Financial Regulatory Reform After the Crisis: An Assessment," Management Science, INFORMS, vol. 64(10), pages 4835-4857, October.
    2. Karimalis, Emmanouil & Kosmidis, Ioannis & Peters, Gareth, 2017. "Multi yield curve stress-testing framework incorporating temporal and cross tenor structural dependencies," Bank of England working papers 655, Bank of England.
    3. Melinda Friesz & Kira Muratov-Szabó & Andrea Prepuk & Kata Váradi, 2021. "Risk Mutualization in Central Clearing: An Answer to the Cross-Guarantee Phenomenon from the Financial Stability Viewpoint," Risks, MDPI, vol. 9(8), pages 1-19, August.

    More about this item

    Keywords

    CCP; Resolution; CCP resolution; No creditor worse off; NCWO counterfactual;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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