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The Concentration of Cleared Derivatives: Can Access to Direct CCP Clearing for End-Users Address the Challenge?

Author

Listed:
  • John McPartland
  • Nahiomy Alvarez

Abstract

Cleared derivatives contracts are now concentrated among a small and dwindling number of institutions. Many policymakers and regulators have argued that this concentration has adverse consequences, some of which may have systemic risk implications. The authors explore the benefits and challenges of encouraging major end-users of derivatives to become direct clearing members of central counterparties (CCPs). If done prudently, increasing and diversifying the pool of clearing members and redistributing outstanding derivatives contracts across them may help CCPs become more resilient.

Suggested Citation

  • John McPartland & Nahiomy Alvarez, 2019. "The Concentration of Cleared Derivatives: Can Access to Direct CCP Clearing for End-Users Address the Challenge?," Working Paper Series WP-2019-6, Federal Reserve Bank of Chicago, revised 20 Aug 2019.
  • Handle: RePEc:fip:fedhwp:wp-2019-06
    DOI: 10.21033/wp-2019-06
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    References listed on IDEAS

    as
    1. Douglas D. Evanoff & Daniela Russo & Robert Steigerwald, 2006. "Policymakers, researchers, and practitioners discuss the role of central counterparties," Economic Perspectives, Federal Reserve Bank of Chicago, issue qiv, pages 2-21.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    derivatives; clearinghouse; financial markets; Central counterparties (CCPs);

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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