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.
Anthony Malakian, US editor of Waters, and James Rundle, news editor of Waters, record a weekly podcast touching on the biggest stories in financial technology.
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; [email protected]
James: @JimRundle; [email protected]
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 [email protected] or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact [email protected] to find out more.
You are currently unable to copy this content. Please contact [email protected] to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
More on Regulation
Waters Wavelength
Waters Wavelength Podcast: Episode 254 (Heads in the cloud)
This week, Tony and Shen talk about how firms approach cloud migration projects.
Subscribe to Weekly Wrap emails
Most read
- Firms challenging Cusip file new lawsuit alleging antitrust violations, breach of contract
- Finos will host common domain model for Isda, Isla and Icma
- Waters Wrap: ASX, Cboe and evolving exchange technology
- Lower cross-border latencies open HFT opportunities
- Retooling repo: How Broadridge, Bloomberg, Tradeweb, and JP Morgan are modernizing repurchase agreements