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Abstract: 

Central counterparty clearinghouses (CCPs) are increasingly viewed as bulwarks of financial systemic stability. Financial reform in the U.S., U.K., and Europe is mandating CCP clearing for standardized over-the-counter (OTC) derivatives. This process will require careful balancing by regulators because CCP clearing does not simply eliminate risk--it may shift or concentrate risk, or generate new risks. End users of swaps, as well as brokers and dealers, are all affected. Meanwhile, tensions between systemic stability and competition remain unresolved and will punctuate the evolution of CCP clearing for OTC derivatives.

Keywords: central counterparty clearinghouses; OTC derivatives clearing; systemic stability; Dodd-Frank Act; E.U. framework; European Securities and Markets Authority; Commodity Futures Trading Commission

Affiliations:  1: Indian Wells Group.