severe, also requires default funds and then imposes position limits. -- Central Counterparty ; Clearing; Default … novating trades implements efficient trading behaviour. It is optimal for the CCP to face default losses to achieve the … efficient level of trade. To cover these losses, the CCP optimally uses margin calls, and, as the default problem becomes more …

We use an extensive data set of bilateral exposures on credit default swap (CDS) to estimate the impact on collateral … demand of new margin and clearing practices and regulations. We decompose collateral demand for both customers and dealers … impact on collateral demand of more widespread initial margin requirements, increased novation of CDS to central clearing …

novating trades implements efficient trading behaviour. It is optimal for the CCP to face default losses to achieve the … efficient level of trade. To cover these losses, the CCP optimally uses margin calls, and, as the default problem becomes more … severe, also requires default funds and then imposes position limits. …

not, they may prefer bilateral clearing either to prevent strategic default or to optimize the allocation of costly …This paper studies the optimal clearing arrangement for bilateral financial contracts in which an assessment of …, at a cost, about the commitment of their borrowers, which affects the assessment of counterparty risk. Clearing through a …

strategic default while economizing on costly collateral. In either case, participants independently choose the efficient …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 …

limited enforcement of trades. We then show that -- when collateral is sufficient to avoid default -- profit-maximizing CCPs … ``overcollateralize'' trades relative to user-oriented CCPs and, hence, are less efficient. However, when collateral is not covering all … default exposure, user-oriented CCPs avoid default, but allow for less trade, while profit-maximizing CCPs yield a higher …

Following the 2008 financial crisis, regulation mandates the clearing of the CDS market through Central Clearing …'s default and the ensuing default contagion. In unwinding the defaulter's positions, the CCP faces the price impact of …

Recent regulation mandating the clearing of credit default swaps (CDS) by a Central Clearing Counterparties (CCP), has …. This work investigates the potential failure of a CCP initiated by the default of a large dealer bank and the unwinding of … profits, and how predation decreases the profits of all members, pushing banks to default. Furthermore, a hybrid CCP (vs …