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The Concentration of Cleared Derivatives: Can Access to Direct CCP Clearing for End-Users Address the Challenge?

John McPartland () and Nahiomy Alvarez

No WP-2019-6, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: Cleared derivatives contracts are now concentrated among a small and dwindling number of institutions. Many policymakers and regulators have argued that this concentration has adverse consequences, some of which may have systemic risk implications. The authors explore the benefits and challenges of encouraging major end-users of derivatives to become direct clearing members of central counterparties (CCPs). If done prudently, increasing and diversifying the pool of clearing members and redistributing outstanding derivatives contracts across them may help CCPs become more resilient.

Keywords: derivatives; clearinghouse; financial markets; Central counterparties (CCPs) (search for similar items in EconPapers)
JEL-codes: G23 G01 G18 G21 (search for similar items in EconPapers)
Date: 2019-08-20, Revised 2019-08-20
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DOI: 10.21033/wp-2019-06

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