Interoperability between central counterparties
JÃ¼rg MÃ¤gerle and
Thomas Nellen ()
Authors registered in the RePEc Author Service: Jürg Mägerle
No 2011-12, Working Papers from Swiss National Bank
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)
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Persistent link: https://EconPapers.repec.org/RePEc:snb:snbwpa:2011-12
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