CCP Risk Assessments

Central counterparties (CCPs) have a systemically important role in resolving many of the issues that triggered the 2007 global financial crises, both in clearing OTC derivatives markets and domestic cash markets. Every CCP has its own way of operating, different margin models, risk waterfalls, financial, ownership and governance models.

• What happens to your collateral contribution in the event of a default?
• What happens to your open positions?
• If a major participant at the CCP goes into default, how quickly does your collateral come under threat?

These questions and others are hugely important for deciding which CCP(s) best fits investor needs. There is huge potential for systemic risk in CCPs and the consequences of failure could be very serious for clearing members, their clients, and the wider market.

Thomas Murray has addressed the global regulatory and risk imperative to assess and monitor CCPs as risk concentrating vehicles. CCP Risk Assessments assess the extent to which a CCP manages your risk burden. There are two key benefits:

• Every assessment brings transparency to the industry for the benefit of users
• Using Thomas Murray provides cost savings to regulated firms that are required to perform due diligence and risk assessments on CCPs