, clearing, and settlement (PCS) processes, including how funds are transferred and how securities, commodities, and derivatives …

Bilateral financial contracts typically require an assessment of counterparty risk. Central clearing of these financial … and to reveal information about such risk. When considering this trade-off, participants would choose central clearing if … information acquisition is incentive compatible. If it is not, they may prefer bilateral clearing, when this choice prevents …

This paper adopts a mechanism design approach to study optimal clearing arrangements for bilateral financial contracts … lender to acquire such information. Central clearing of these financial contracts through a central counterparty (CCP) allows … about such risks. If information acquisition is incentive compatible, then lenders choose central clearing. If it is not …