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

Nahiomy Alvarez and John McPartland
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Nahiomy Alvarez: https://www.chicagofed.org/people/a/alvarez-nahiomy

No WP-2019-6, Working Paper Series from Federal Reserve Bank of Chicago

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.

Keywords: Central counterparties (CCPs); clearinghouses; derivatives; financial markets (search for similar items in EconPapers)
JEL-codes: G01 G18 G21 G23 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019-08-20
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-2019-06

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DOI: 10.21033/wp-2019-06

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