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10/28/14 - The New Prudential Framework for Central Clearing

Policymakers are emphasizing mandated clearing of over-the-counter derivatives transactions through central counterparties as an important step in enhancing financial stability. CCPs are long-standing mechanisms for managing counterparty risk, and have a good track record handling the defaults of clearing members.

The new mandate also requires a strong prudential framework for CCPs. Please click below to read a Sightlines InFocus by Jeff Stehm that discusses the elements of this framework that are in place and those that remain unfinished — as well as long-term implications for CCPs’ supervisory relationships, clearing costs, and risk management.