Wavelength Podcast Episode 120: CCP Non-Default Losses
James and Anthony look at the main issues around CCP non-default losses, who should be responsible for these funds, and where this is all heading.
This week, Anthony and James examine the issue of clearinghouse management and the risk of non-default losses at a center counterparty clearinghouse (CCP).
To hear the full interview, listen in the player above, or you can download it.
Essentially, how do these entities manage operational risks around cyber-attacks, fraud or disaster recovery? Futures Commission Merchants (FCMs) argue that they shouldn’t be responsible for risk they don’t introduce into the clearinghouse; CCPs argue that the whole point of a clearinghouse is to mutualize risk.
This topic is coming to a head because earlier this year the European Parliament proposed rules on how these should be managed, the first time anyone’s really codified it. Under this, the CCPs have to contribute 25 percent of what they put into the default fund—known as their “skin-in-the-game”—to cover these risks, before they dip into member money that is meant to be there to guarantee trades.
James discusses the main issues involved, how serious a non-default loss could be versus something like a member default, why everyone should care about this issue, and what we can expect going forward. Anthony just basically listens and nods.
The conversation starts at about the 3:45 mark and goes to about 17:00, where they transition—naturally—to a discussion of horror films.
Upcoming Events
Buy-Side Technology European Summit (London)
North American Financial Information Summit (New York)
Toronto Financial Information Summit (Toronto)
Tokyo Financial Information & Technology Summit (Tokyo)
Contact Info
As is the case with everything we do, we'd love to get some feedback from our listeners. Feel free to reach out to Anthony or James via Twitter or email.
Anthony: @a_malakian; anthony.malakian@infopro-digital.com
James: @JimRundle; james.rundle@infopro-digital.com
Past 10 episodes:
Episode 109: An Overview of the CFTC Technology Advisory Committee’s Meeting
Episode 110: An Examination of the Temenos-Fidessa Deal
Episode 111: The Challenges Facing Utilities
Episode 112: A Look at How Fintechs are Being Disruptive
Episode 113: IBM's Lund on Blockchain's Evolution
Episode 114: A Recap of FIA Boca - Blockchain, Crypto, AI, Brexit
Episode 115: The CME Buys NEX Group
Episode 116: The Perils of Bitcoin; SS&C and Ion Move in on Fidessa
Episode 117: Machine Learning, Chatbots & Fintechs
Episode 118: CAT ‘State of the Union’, RTS 27 & 28 Concerns
Episode 119: SS&C's Acquisition Plans; Data Privacy Concerns; May 2018 Features
Further reading
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Off-channel messaging (and regulators) still a massive headache for banks
Waters Wrap: Anthony wonders why US regulators are waging a war using fines, while European regulators have chosen a less draconian path.
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
Chevron’s absence leaves questions for elusive AI regulation in US
The US Supreme Court’s decision to overturn the Chevron deference presents unique considerations for potential AI rules.
Aussie asset managers struggle to meet ‘bank-like’ collateral, margin obligations
New margin and collateral requirements imposed by UMR and its regulator, Apra, are forcing buy-side firms to find tools to help.
The costly sanctions risks hiding in your supply chain
In an age of geopolitical instability and rising fines, financial firms need to dig deep into the securities they invest in and the issuing company’s network of suppliers and associates.
Industry associations say ECB cloud guidelines clash with EU’s Dora
Responses from industry participants on the European Central Bank’s guidelines are expected in the coming weeks.
Regulators recommend Figi over Cusip, Isin for reporting in FDTA proposal
Another contentious battle in the world of identifiers pits the Figi against Cusip and the Isin, with regulators including the Fed, the SEC, and the CFTC so far backing the Figi.
US Supreme Court clips SEC’s wings with recent rulings
The Supreme Court made a host of decisions at the start of July that spell trouble for regulators—including the SEC.
