The Journal of Derivatives · 2012 · 13 citations · 2 references
LawFinanceRisk ManagementContractsDerivatives RegulationPrudential SupervisionCentral Counterparty ClearingClearing Of DerivativesCounterparty Credit RiskCredit RiskFinancial RiskOver-the-counter DerivativesCentral Counterparty Clearing HousesCleared Derivatives MarketsClearing House Risk ManagementClearing MembershipCounterparty RiskOver-the-counter Derivatives ClearingRegulation Of Central CounterpartiesResolution Of Clearing Houses
One key feature of the Dodd—Frank Act is the requirement that the majority of derivatives contracts should be cleared through central counterparties (CCPs). This feature will substantially increase transparency and decrease exposure to counterparty credit risk in the over-the-counter (OTC) derivatives business, both of which are highly desirable from the point of view of the trading public. But a number of other issues are raised in the process, including the effect of counterparty risk vis-à-vis the clearinghouse, as Hull elaborates. He then suggests an alternative procedure for unwinding the positions of a defaulting clearing member, which would reduce the exposure of the clearinghouse itself to the risk of insolvency following a major member default. <b>TOPICS:</b>Derivatives, counterparty risk, exchanges/markets/clearinghouses
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OTC derivatives and central clearing: can all transactions be cleared?
James Hull · 2010 · 42 citations
Law, Finance, Regulatory Policy +17