Default Risk Mitigation Mechanisms in Derivatives Markets
8 Pages Posted: 6 Oct 2008
Date Written: October 6, 2008
In this note we describe some important default risk mitigation mechanisms employed in derivatives markets. We focus on those mitigation mechanisms that differ across contracts traded in today's derivatives markets. We analyze netting, margining, rehypothecation, and central counterparties.
Keywords: Derivative securities, default risk, collateral, margining, central counterparty
JEL Classification: G19, G21
Suggested Citation: Suggested Citation