Nothing is Clear about Clearing!

17 Pages Posted: 1 Apr 2015 Last revised: 8 Nov 2015

Date Written: March 31, 2015

Abstract

The rationale behind clearing in financial markets is twofold: clearing houses are aimed at reducing the vulnerability to systemic risks and at changing the allocation of default risk in financial markets and, thus, improve the efficiency of financial markets. This paper mitigates the standard idea according to which clearing reduces systemic risk and promotes market efficiency. The visibility associated to the clearing system will have a cost that most regulators are not ready to face.

Keywords: Regulation, Central Clearing, Collateral

Suggested Citation

Kamtchueng, Christian and Porcher, Simon, Nothing is Clear about Clearing! (March 31, 2015). Available at SSRN: https://ssrn.com/abstract=2587698 or http://dx.doi.org/10.2139/ssrn.2587698

Christian Kamtchueng (Contact Author)

CTK corp ( email )

Canary Wharf
London

HOME PAGE: http://www.cityquant.com

Simon Porcher

IAE Paris - Sorbonne Business School ( email )

IAE - Université Paris I Panthéon-Sorbonne
8 bis rue croix de Jarry
Paris, 75013
France

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