Design Choices in Central Clearing: Issues Facing Small Advanced Economies

Reserve Bank of New Zealand Analytical Note Series, 2014

47 Pages Posted: 8 Jun 2020

See all articles by David Murphy

David Murphy

London School of Economics - Law Department; Bank of England

Edwin Budding

affiliation not provided to SSRN

Date Written: December 1, 2014

Abstract

For some contracts traded between some institutions, central clearing is becoming mandatory. Regulatory incentives are also being altered to encourage the use of CCPs where reasonably possible, and to ensure that where central clearing is not appropriate capital is held against the risks that arise. In this paper, we review some of the issues involved in deciding which transactions should be centrally cleared, where CCPs should be located, and how they should be designed, managed, and regulated. As derivatives reform progresses, the soundness of the central counterparties becomes more important to the soundness of the financial system, so these questions are important.

Keywords: Central clearing, CCPs, clearing mandate

JEL Classification: G28, G23

Suggested Citation

Murphy, David and Budding, Edwin, Design Choices in Central Clearing: Issues Facing Small Advanced Economies (December 1, 2014). Reserve Bank of New Zealand Analytical Note Series, 2014, Available at SSRN: https://ssrn.com/abstract=3599897 or http://dx.doi.org/10.2139/ssrn.3599897

David Murphy (Contact Author)

London School of Economics - Law Department

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Edwin Budding

affiliation not provided to SSRN

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