Central counterparties and banks: vive la difference

Mark Jozsef Manning and David Hughes

Journal of Financial Market Infrastructures

Abstract: ABSTRACT Since the global financial crisis, central counterparties (CCPs) have assumed an;increasingly prominent role in the financial system. While regulatory standards for;CCPs have been strengthened in recent years, there remains considerable debate in;both industry and policy circles as to whether they are adequate to promote resilience.;In this debate, experience has often been drawn from bank regulation. To help ground;the debate, this paper draws out the essential differences between CCPs and banks,;comparing indicators of systemic importance and considering implications for the;regulatory approach. It argues that banks and CCPs may affect systemic stability in;different ways, with a CCP's systemic importance derived from that of its participants.;While size is an important indicator of a bank's systemic importance, a CCP's;central role in the financial network and its typical lack of substitutability are likely to;be more important. The paper demonstrates that, while continuous review and challenge;is important, any refinements to regulatory standards for CCPs to reflect lessons;drawn from bank regulation should not overlook these differences.

References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.risk.net/journal-of-financial-market-i ... s-vive-la-difference (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rsk:journ7:2449646

Access Statistics for this article

More articles in Journal of Financial Market Infrastructures from Journal of Financial Market Infrastructures
Bibliographic data for series maintained by Thomas Paine ().