Derivatives Clearing and Settlement: A Comparison of Central Counterparties and Alternative Structures
Robert R. Bliss
Wake Forest University - Schools of Business
Robert S. Steigerwald
Federal Reserve Bank of Chicago
Economic Perspectives, Vol. 30, No. 4, Fourth Quarter 2006
Most exchange-traded and some over-the-counter (OTC) derivatives are cleared and settled through clearinghouses that function as central counterparties (CCPs). Most OTC derivatives are settled bilaterally. This article discusses how these alternative mechanisms affect the functioning of derivatives markets and describes some of the advantages and disadvantages of each.
Number of Pages in PDF File: 8
Keywords: central counterparty, CCP, clearing and settlement, risk management, Central Banks and Their Policies, Information and Market Efficiency, Event Studies, Government Policy and Regulation, Regulated Industries and Administrative Law, Transactional Relation
Date posted: December 5, 2006
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