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Clearing risks in OTC derivatives markets: the CCP-bank nexus

Umar Faruqui, Wenqian Huang and Elod Takats

BIS Quarterly Review, 2018

Abstract: Systemically important banks and central counterparties (CCPs) interact in highly concentrated over-the-counter (OTC) derivatives markets. We outline the CCP-bank nexus to think about the endogenous interactions between banks and CCPs in periods of stress. As these interactions could potentially lead to destabilising feedback loops, the risks of banks and CCPs should be considered jointly, rather than in isolation.

JEL-codes: G01 G18 G21 G23 (search for similar items in EconPapers)
Date: 2018
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