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Ownership, Incentives and Regulation of CCP Risks

Ownership, Incentives and Regulation of CCP Risks

Louise Carter, Jennifer Hancock, Mark Manning
Copyright: © 2018 |Pages: 33
ISBN13: 9781522554813|ISBN10: 1522554815|EISBN13: 9781522554820
DOI: 10.4018/978-1-5225-5481-3.ch024
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MLA

Carter, Louise, et al. "Ownership, Incentives and Regulation of CCP Risks." Global Business Expansion: Concepts, Methodologies, Tools, and Applications, edited by Information Resources Management Association, IGI Global, 2018, pp. 489-521. https://doi.org/10.4018/978-1-5225-5481-3.ch024

APA

Carter, L., Hancock, J., & Manning, M. (2018). Ownership, Incentives and Regulation of CCP Risks. In I. Management Association (Ed.), Global Business Expansion: Concepts, Methodologies, Tools, and Applications (pp. 489-521). IGI Global. https://doi.org/10.4018/978-1-5225-5481-3.ch024

Chicago

Carter, Louise, Jennifer Hancock, and Mark Manning. "Ownership, Incentives and Regulation of CCP Risks." In Global Business Expansion: Concepts, Methodologies, Tools, and Applications, edited by Information Resources Management Association, 489-521. Hershey, PA: IGI Global, 2018. https://doi.org/10.4018/978-1-5225-5481-3.ch024

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Abstract

This chapter develops a framework to analyse the factors influencing central counterparties' (CCPs') risk controls and the role of regulation. The framework illustrates the importance of sound regulation of CCPs and helps to explain why different CCPs may make different risk management choices. Key factors include ownership, governance and the profile and preferences of participants. International standards for the design and operation of CCPs and other financial market infrastructures (FMIs) are reflected in the Principles for Financial Market Infrastructures (PFMIs). Modelling key elements of these standards, the chapter demonstrates the importance of a flexible regulatory framework that achieves the desired level of stability while allowing the mix of risk controls applied by each CCP to vary according to its particular incentives and operating environment. The chapter goes on to discuss the emerging trends towards competition and interoperability between CCPs and cross-border provision of clearing services, and consider the implications for CCPs' risk management choices.

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