8 Pages Posted: 5 Dec 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.
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
Suggested Citation: Suggested Citation
Bliss, Robert R. and Steigerwald, Robert S., Derivatives Clearing and Settlement: A Comparison of Central Counterparties and Alternative Structures. Economic Perspectives, Vol. 30, No. 4, Fourth Quarter 2006. Available at SSRN: https://ssrn.com/abstract=948769
By Julia Allen
By David Skeel