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Interoperability between central counterparties

Jürg Mägerle and Thomas Nellen ()

No 2011-12, Working Papers from Swiss National Bank

Abstract: In reaction to recent requests for interoperability between central counterparties of European stock markets, regulators have issued new guidelines to contain systemic risk. Our analysis confirms that the currently applied cross-CCP risk management model can be a source of contagion, particularly if applied in multilateral frameworks. While regulators' new guidelines eliminate systemic risk, this comes at the cost of an inefficiently overcollateralised clearing system. We discuss further approaches that contain systemic risk while reducing or eliminating overcollateralisation. Interoperability is of economic importance as it may contribute to the efficiency and safety of a worldwide fragmented clearing infrastructure.

Keywords: interoperability between central counterparties; financial network; systemic risk; netting efficiency (search for similar items in EconPapers)
JEL-codes: E42 E58 G01 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2011
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