Optimizing Incentives, Resilience and Stability in Central Counterparty Clearing

September 22, 2020

Key Highlights:

Central counterparty clearinghouses like OCC — which stand between buying and selling parties in trades and manage the risk to the market should one side of a transaction default — have worked extremely well over the course of their existence by underpinning stable markets to the benefit of the investing public during times of market stress.
With record-setting cleared contract volume so far in 2020, OCC is taking new steps to further enhance its financial and operational resiliency and respond to industry feedback, including previously establishing skin-in-the-game, and recently announced plans to seek regulatory approval to increase it.
CCPs must have an eye toward supporting the entire market ecosystem, balancing and optimizing incentives toward maximum stability, security and continued functioning in regular times and particularly in times of stress.