Central Counterparties

Author : Jon Gregory
Publisher : John Wiley & Sons
Page : 328 pages
File Size : 48,6 Mb
Release : 2014-06-25
Category : Business & Economics
ISBN : 9781118891582

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Central Counterparties by Jon Gregory Pdf

Practical guidance toward handling the latest changes to the OTC derivatives market Central Counterparties is a practical guide to central clearing and bilateral margin requirements, from one of the industry's most influential credit practitioners. With up-to-date information on the latest regulations imposed after the global financial crisis, this book covers the mechanics of the clearing process and analyses the resulting consequences. Detailed discussion explains the ways in which the very significant clearing and margining rules will affect the OTC derivatives market and the financial markets in general, with practical guidance toward implementation and how to handle the potential consequences. Over-the-counter derivatives were blamed by many for playing a major role in the 2007 financial crisis, resulting in a significant attention and dramatic action by policymakers, politicians, and regulators to reduce counterparty credit risk which was seen as a major issue in the crisis. The two most important regulatory changes are the mandatory clearing of standardised OTC derivatives, and the requirements for bilateral margin posting in non-standard OTC contracts. Central Counterparties is a complete reference guide to navigating these changes, providing clarification and practical advice. Review the mitigation of counterparty credit risk with the historical development of central clearing Clarify the latest regulatory requirements imposed by Dodd-Frank, EMIR, Basel III and more Learn the mechanics of central clearing, with special attention to complex issues such as margin calculations, the loss waterfall, client clearing and regulatory capital rules Gain insight into the advantages and disadvantages of clearing and bilateral margin requirements, and the potential issues that arise As the clearing and margining mandates are phased in, the associated costs will be severe enough to dramatically shift the topology of the financial markets and transform the nature of risk. Central Counterparties provides the information, clarification and expert insight market practitioners need to get up to speed quickly.

Author : Group of Ten. Committee on Payment and Settlement Systems
Publisher : Unknown
Page : 80 pages
File Size : 55,5 Mb
Release : 2004
Category : Clearing of securities
ISBN : IND:30000116787171

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Recommendations for Central Counterparties by Group of Ten. Committee on Payment and Settlement Systems Pdf

Author : Froukelien Wendt
Publisher : International Monetary Fund
Page : 25 pages
File Size : 40,6 Mb
Release : 2015-01-27
Category : Business & Economics
ISBN : 9781498322058

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Central Counterparties: Addressing their Too Important to Fail Nature by Froukelien Wendt Pdf

Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.

Author : Jon Gregory
Publisher : John Wiley & Sons
Page : 328 pages
File Size : 41,9 Mb
Release : 2014-06-17
Category : Business & Economics
ISBN : 9781118891575

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Central Counterparties by Jon Gregory Pdf

Practical guidance toward handling the latest changes to the OTCderivatives market Central Counterparties is a practical guide to centralclearing and bilateral margin requirements, from one of theindustry's most influential credit practitioners. With up-to-dateinformation on the latest regulations imposed after the globalfinancial crisis, this book covers the mechanics of the clearingprocess and analyses the resulting consequences. Detaileddiscussion explains the ways in which the very significant clearingand margining rules will affect the OTC derivatives market and thefinancial markets in general, with practical guidance towardimplementation and how to handle the potential consequences. Over-the-counter derivatives were blamed by many for playing amajor role in the 2007 financial crisis, resulting in a significantattention and dramatic action by policymakers, politicians, andregulators to reduce counterparty credit risk which was seen as amajor issue in the crisis. The two most important regulatorychanges are the mandatory clearing of standardised OTC derivatives,and the requirements for bilateral margin posting in non-standardOTC contracts. Central Counterparties is a completereference guide to navigating these changes, providingclarification and practical advice. Review the mitigation of counterparty credit risk with thehistorical development of central clearing Clarify the latest regulatory requirements imposed byDodd-Frank, EMIR, Basel III and more Learn the mechanics of central clearing, with special attentionto complex issues such as margin calculations, the loss waterfall,client clearing and regulatory capital rules Gain insight into the advantages and disadvantages of clearingand bilateral margin requirements, and the potential issues thatarise As the clearing and margining mandates are phased in, theassociated costs will be severe enough to dramatically shift thetopology of the financial markets and transform the nature of risk.Central Counterparties provides the information,clarification and expert insight market practitioners need to getup to speed quickly.

Author : Mr.Manmohan Singh,Dermot Turing
Publisher : International Monetary Fund
Page : 23 pages
File Size : 47,6 Mb
Release : 2018-03-20
Category : Business & Economics
ISBN : 9781484347300

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Central Counterparties Resolution—An Unresolved Problem by Mr.Manmohan Singh,Dermot Turing Pdf

Recovery and resolution regimes are being developed for central counterparties (CCPs). We analyse current resolution tools in the context of policy, which is to restore the critical functions of a failed CCP. We conclude that the toolkit is insufficient to avoid the costs of resolution being borne by taxpayers, and propose alternative policy suggestions for addressing the problem of a failed CCP.

Author : Mr.Manmohan Singh,Dermot Turing
Publisher : International Monetary Fund
Page : 23 pages
File Size : 40,8 Mb
Release : 2018-03-20
Category : Business & Economics
ISBN : 9781484348420

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Central Counterparties Resolution—An Unresolved Problem by Mr.Manmohan Singh,Dermot Turing Pdf

Recovery and resolution regimes are being developed for central counterparties (CCPs). We analyse current resolution tools in the context of policy, which is to restore the critical functions of a failed CCP. We conclude that the toolkit is insufficient to avoid the costs of resolution being borne by taxpayers, and propose alternative policy suggestions for addressing the problem of a failed CCP.

Author : Jiabin Huang
Publisher : Bloomsbury Publishing
Page : 225 pages
File Size : 50,8 Mb
Release : 2010-10-20
Category : Law
ISBN : 9781847316097

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The Law and Regulation of Central Counterparties by Jiabin Huang Pdf

The Law and Regulation of Central Counterparties provides a detailed analysis of the legal and regulatory aspects of Central Counterparties (CCPs) with an introduction to their role and functions in modern financial markets. The book begins by describing in detail basic elements of modern post-trade infrastructure, exploring the modern functional and operational aspects of CCPs in the markets. It moves on to discuss the relationships between CCPs and their members, and clients of clearing members as non-members, legal issues concerning collateralisation, netting and set-off, and default arrangements that are primarily embedded in the form of the rules and regulations of CCPs. With regard to regulatory issues, the book examines the regulatory framework with reference to the UK and the EU. As to the case for a single CCP for various different types of markets, the analysis covers the advantages and disadvantages of CCP clearing and carries out an assessment of the risks and benefits of a single multi-market CCP.

Author : Peter Norman
Publisher : John Wiley & Sons
Page : 403 pages
File Size : 42,7 Mb
Release : 2011-09-07
Category : Business & Economics
ISBN : 9781119977940

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The Risk Controllers by Peter Norman Pdf

Clearing houses, or CCPs, were among the very few organisations to emerge from the global financial crisis with their standing enhanced. In the chaotic aftermath of the bankruptcy of Lehman Brothers, they successfully completed trades worth trillions of dollars in a multitude of financial instruments across listed and over-the-counter markets, and so helped avert financial Armageddon. That success transformed the business of clearing. Governments and regulators around the world gave CCPs and the clearing services they provide a front-line role in protecting the global economy from future excesses of finance. CCPs, which mitigate risk in financial markets, responded by greatly expanding their activities, notably in markets for over-the-counter derivatives, and often in fierce competition with one another. In The Risk Controllers, journalist and author Peter Norman describes how CCPs operate, how they handled the Lehman default, and the challenges they now face. Because central counterparty clearing is a complex business with a long history that continues to influence decisions and structures even in today’s fast changing world, The Risk Controllers explores the development of CCPs and clearing from the earliest times to the present. It draws on the experiences of the people who helped to shape the business of clearing today. It sets the development of CCPs and clearing in the broader context of changes in society, politics and regulation. The book examines turning points, such as the 1987 stock market crash, that set clearing on a new path and the impact of long running trends, including the exponential growth of computer power and the ebb and flow of globalisation. Written in non-technical language, The Risk Controllers provides a unique and accessible guide to CCPs and clearing. It is essential reading for clearing professionals, legislators and regulators whose job it is to take this vitally important business into the future. “The recent crisis has, thankfully, renewed interest in the importance of central counterparties: how they can help preserve stability or, as Hong Kong showed in 1987, undermine stability if they are not super sound. Peter Norman’s book places the role of clearing houses in a historical context, and explains why the financial system’s plumbing matters so much. It should be read by anyone interested in building safer capital markets.” Paul Tucker, Deputy Governor Financial Stability, Bank of England

Author : Froukelien Wendt
Publisher : International Monetary Fund
Page : 25 pages
File Size : 41,7 Mb
Release : 2015-01-27
Category : Business & Economics
ISBN : 9781475572933

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Central Counterparties by Froukelien Wendt Pdf

Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.

Author : Jon Gregory
Publisher : John Wiley & Sons
Page : 328 pages
File Size : 55,8 Mb
Release : 2014-07-21
Category : Business & Economics
ISBN : 9781118891513

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Central Counterparties by Jon Gregory Pdf

Practical guidance toward handling the latest changes to the OTC derivatives market Central Counterparties is a practical guide to central clearing and bilateral margin requirements, from one of the industry's most influential credit practitioners. With up-to-date information on the latest regulations imposed after the global financial crisis, this book covers the mechanics of the clearing process and analyses the resulting consequences. Detailed discussion explains the ways in which the very significant clearing and margining rules will affect the OTC derivatives market and the financial markets in general, with practical guidance toward implementation and how to handle the potential consequences. Over-the-counter derivatives were blamed by many for playing a major role in the 2007 financial crisis, resulting in a significant attention and dramatic action by policymakers, politicians, and regulators to reduce counterparty credit risk which was seen as a major issue in the crisis. The two most important regulatory changes are the mandatory clearing of standardised OTC derivatives, and the requirements for bilateral margin posting in non-standard OTC contracts. Central Counterparties is a complete reference guide to navigating these changes, providing clarification and practical advice. Review the mitigation of counterparty credit risk with the historical development of central clearing Clarify the latest regulatory requirements imposed by Dodd-Frank, EMIR, Basel III and more Learn the mechanics of central clearing, with special attention to complex issues such as margin calculations, the loss waterfall, client clearing and regulatory capital rules Gain insight into the advantages and disadvantages of clearing and bilateral margin requirements, and the potential issues that arise As the clearing and margining mandates are phased in, the associated costs will be severe enough to dramatically shift the topology of the financial markets and transform the nature of risk. Central Counterparties provides the information, clarification and expert insight market practitioners need to get up to speed quickly.

Author : Alexandra G. Balmer
Publisher : Edward Elgar Publishing
Page : 256 pages
File Size : 51,9 Mb
Release : 2018-06-29
Category : Law
ISBN : 9781788111928

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Regulating Financial Derivatives by Alexandra G. Balmer Pdf

This book puts forward a holistic approach to post-crisis derivatives regulation, providing insight into how new regulation has dealt with the risk that OTC derivatives pose to financial stability. It discusses the implications that post crisis regulation has had on central counterparties and the risk associated with clearing of OTC derivatives. The author offers a novel solution to tackle the potential negative externalities from the failure of a central counterparty and identifies potential new risks arising from post crisis reforms.

Author : Mr. Manmohan Singh
Publisher : International Monetary Fund
Page : 16 pages
File Size : 51,9 Mb
Release : 2014-11-12
Category : Business & Economics
ISBN : 9781498340151

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Limiting Taxpayer “Puts”—An Example from Central Counterparties by Mr. Manmohan Singh Pdf

Nonbanks such as central counterparties (CCPs) are a useful lens to see how regulators view the role of the lender-of-last-resort (LOLR). This paper explores the avenues available when a nonbank failure is likely, specifically by considering the options of keeping CCPs afloat. It is argued that CCPs have, by regulatory fiat, become “too important to fail,” and thus the imperative should be greater loss-sharing by all participants that better align the distribution of risks and rewards of CCPs, the clearing members and derivative end-users. In the context of LOLR, the proposed variation margin gains haircut (VMGH) is discussed as a way of limiting the taxpayer put.

Author : Michael Simmons
Publisher : John Wiley & Sons
Page : 877 pages
File Size : 48,8 Mb
Release : 2019-02-18
Category : Business & Economics
ISBN : 9781119377122

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Collateral Management by Michael Simmons Pdf

Insight into collateral management and its increasing relevance in modern banking In the wake of recent financial crises, firms of all sizes have adjusted their policies to incorporate more frequent instances of collateral management. Collateral Management: A Guide to Mitigating Counterparty Risk explains the connection between the need for collateral management in order to alleviate counterparty risk and the actions that firms must take to achieve it. Targeted at middle and back office managers seeking a hands-on explanation of the specifics of collateral management, this book offers a thorough treatment of the subject and attends to details such as internal record management, daily procedures used in making and receiving collateral calls, and settlement-related issues that affect the movements of cash and securities collateral. An expert in financial topics ranging from trade lifecycle to operational risk, author Michael Simmons offers readers insight into a field that, so far, is struggling to produce enough expertise to meet its high demand. Presents hands-on advice and examples from a bestselling, internationally renowned author who introduces his third book on operations and operations-related activities Explains the relationship between collateral management and preventing institutional defaults, such as the recent Lehman Brothers downfall Since 2008, firms have recognized and embraced the importance of collateral management, but this book will provide practitioners with a deeper understanding and appreciation of its relevance.

Author : Ms.Li Lin,Jay Surti
Publisher : International Monetary Fund
Page : 47 pages
File Size : 43,9 Mb
Release : 2013-01-08
Category : Business & Economics
ISBN : 9781475535501

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Capital Requirements for Over-the-Counter Derivatives Central Counterparties by Ms.Li Lin,Jay Surti Pdf

The central counterparties dominating the market for the clearing of over-the-counter interest rate and credit derivatives are globally systemic. Employing methodologies similar to the calculation of banks’ capital requirements against trading book exposures, this paper assesses the sensitivity of central counterparties’ required risk buffers, or capital requirements, to a range of model inputs. We find them to be highly sensitive to whether key model parameters are calibrated on a point-in-time versus stress-period basis, whether the risk tolerance metric adequately captures tail events, and the ability—or lack thereof—to define exposures on the basis of netting sets spanning multiple risk factors. Our results suggest that there are considerable benefits from having prudential authorities adopt a more prescriptive approach to for central counterparties’ risk buffers, in line with recent enhancements to the capital regime for banks.

Author : Jon Gregory
Publisher : John Wiley & Sons
Page : 709 pages
File Size : 41,6 Mb
Release : 2020-07-07
Category : Business & Economics
ISBN : 9781119508977

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The xVA Challenge by Jon Gregory Pdf

A thoroughly updated and expanded edition of the xVA challenge The period since the global financial crisis has seen a major re-appraisal of derivatives valuation, generally expressed in the form of valuation adjustments (‘xVAs’). The quantification of xVA is now seen as fundamental to derivatives pricing and valuation. The xVA topic has been complicated and further broadened by accounting standards and regulation. All users of derivatives need to have a good understanding of the implications of xVA. The pricing and valuation of the different xVA terms has become a much studied topic and many aspects are in constant debate both in industry and academia. Discussing counterparty credit risk in detail, including the many risk mitigants, and how this leads to the different xVA terms Explains why banks have undertaken a dramatic reappraisal of the assumptions they make when pricing, valuing and managing derivatives Covers what the industry generally means by xVA and how it is used by banks, financial institutions and end-users of derivatives Explains all of the underlying regulatory capital (e.g. SA-CCR, SA-CVA) and liquidity requirements (NSFR and LCR) and their impact on xVA Underscores why banks have realised the significant impact that funding costs, collateral effects and capital charges have on valuation Explains how the evolution of accounting standards to cover CVA, DVA, FVA and potentially other valuation adjustments Explains all of the valuation adjustments – CVA, DVA, FVA, ColVA, MVA and KVA – in detail and how they fit together Covers quantification of xVA terms by discussing modelling and implementation aspects. Taking into account the nature of the underlying market dynamics and new regulatory environment, this book brings readers up to speed on the latest developments on the topic.