On the choice of central counterparties in the EU

Gabrielle Demange and Thibaut Piquard

Journal of Financial Markets, 2023, vol. 64, issue C

Abstract: We study competition between European Union’s Central CounterParties (CCPs) on the credit default swap (CDS) market. Using data on market shares, we show that CCPs have a monopoly for single-name CDSs and compete on indices along various dimensions. Using transactions data, we focus on the major dealers who alternatively clear their transactions on the two main CCPs. Estimating their choice of CCP reveals that fees, CCPs’ robustness and activity, dealers’ risk, and market volatility are significant. Dealers’ positions indicate that saving on collateral costs is secondary relative to the benefits of dual membership and quality.

Keywords: Central counter-party; Central clearing; Dealers; Collateral (search for similar items in EconPapers)
JEL-codes: G18 G20 G23 G33 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: On the choice of central counterparties in the EU (2023)
Working Paper: On the choice of central counterparties in the EU (2023)
Working Paper: On the Choice of Central Counterparties in the EU (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:64:y:2023:i:c:s1386418123000174

DOI: 10.1016/j.finmar.2023.100819

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