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Exchanges & CCPs

Central counterparties (CCPs) bring stability and efficiency to the markets by clearing and providing settlement guarantees for market transactions. Internally, they depend on multilateral netting and margining to cover their settlement risk. Sound risk management and optimised margining are therefore critical to ensure the stability and solvency of the clearing house as its member firms.

In the post Lehman Brothers world order, central counterparties play a critical role in guaranteeing Over the Counter (OTC) transactions. With a higher number of small and private institutions participating in the markets, CCPs stand to take on much higher counterparty risks by providing settlement guarantees. Also, with dynamically growing markets, the product mix has broadened considerably, especially OTC trades in the forex derivatives and interest rate products. Central counterparties therefore need a solution that can margin multiple asset classes across multiple currencies as well as compute margins efficiently to help them broaden their business while ensuring their safety.

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