Clearing houses as system risk managers - speech by Paul Tucker

In a speech at the launch of the Depository Trust & Clearing Corporation (DTCC) - Centre for the Study of Financial Innovation (CSFI) Post-Trade Fellowship, Paul Tucker – Deputy Governor for Financial Stability, member of the Monetary Policy Committee and member of the interim Financial Policy Committee –discusses the crucial role central clearing parties (CCPs) play in the financial system and makes several recommendations on how they can better contribute to preserving stability.
Published on 01 June 2011

In order to perform their multiple tasks, CCPs should do the following: a) regard themselves and act as system risk managers; b) avoid heavily procyclical margining policies; c) monitor the soundness of their clearing members and the risks they bring to the CCP. He calls for debates on whether clearing houses should set margin requirements on a gross basis rather than net; whether macro-prudential authorities should vary minimum margin requirements over the cycle; and on the development of an ex ante resolution framework for limiting disorder if a CCP were ever to fail.

PDFPress release


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