Skin in the game: central counterparty risk controls and incentives

Louise Carter and Megan Garner

Journal of Financial Market Infrastructures

Abstract: ABSTRACT The increasing systemic importance of central counterparties (CCPs) has seen recent policy debates focus on the ability of CCPs to withstand a crisis effectively. CCPs maintain prefunded financial resources to cover the potential losses arising from the default of a clearing participant. This paper discusses the incentives created by the composition of these resources, and draws out the role of transparency and governance in ensuring these incentives are effective.

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Persistent link: https://EconPapers.repec.org/RePEc:rsk:journ7:2449626

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