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On the market structure of central counterparties in the EU

Gabrielle Demange () and Thibaut Piquard ()
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Thibaut Piquard: PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Banque de France - Banque de France - Banque de France

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Abstract: New regulations promote the role of Central Counter-Parties as insurers of counterparty risk to stabilize derivative markets. Most CCPs are for-profit institutions, competing for profits and market shares. Whether competition is harmful or beneficial to efficiency and financial stability is debatable, leading to different positions in the US and the EU. Assessing the impact of competition between CCPs is complex because of the many dimensions involved in their policies and the heterogeneity of their potential users, ranging from main intermediaries (the dealers) to final clients. We first review the business model of CCPs and illustrate the dimensions on which CCPs compete by gathering EU data on CCPs, their scopes, their clients and members. We then focus on the clearing of CDS by providing an empirical analysis of on the choices of CCPs by the main dealers.

Keywords: Central counter-party; Dealers; Central clearing; Competition; Collateral (search for similar items in EconPapers)
Date: 2021-01
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