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Sources of Financial Risk for Central Counterparties

Author

Listed:
  • Jennifer Hancock

    (Reserve Bank of Australia)

  • David Hughes

    (Reserve Bank of Australia)

  • Suchita Mathur

    (Reserve Bank of Australia)

Abstract

Central counterparties (CCPs) play an important role in managing the risks present in financial markets and in increasing the overall stability of the financial system. This requires CCPs to be sufficiently financially resilient so that they can withstand extreme but plausible events that would pose significant stress. As use of CCPs becomes more widespread, increasing attention is being paid to how CCPs conduct stress tests to evaluate the adequacy of their financial resources. This article describes the sources of, and the circumstances in which CCPs are exposed to, financial risks and how CCPs typically manage these risks.

Suggested Citation

  • Jennifer Hancock & David Hughes & Suchita Mathur, 2016. "Sources of Financial Risk for Central Counterparties," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 69-76, September.
    • Handle: RePEc:rba:rbabul:sep2016-09
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2016/sep/pdf/rba-bulletin-2016-09-sources-of-financial-risk-for-central-counterparties.pdf
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    Cited by:

    1. Dávid Zoltán Szabó & Kata Váradi, 2022. "Margin requirements based on a stochastic correlation model," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(10), pages 1797-1820, October.

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