Sources of Financial Risk for Central Counterparties

Jennifer Hancock, David Hughes and Suchita Mathur
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Jennifer Hancock: Reserve Bank of Australia
David Hughes: Reserve Bank of Australia
Suchita Mathur: Reserve Bank of Australia

RBA Bulletin (Print copy discontinued), 2016, 69-76

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.

Keywords: central counterparties; financial market infrastructures; credit risk; liquidity risk (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbabul:sep2016-09

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