What are Central Counterparties (CCPs)?

What are Central Counterparties (CCPs)?

Peter Eisenhardt

30 years: Capital markets & investment banking

Central Counterparties, or CCPs, reduce settlement and credit risk and costs by netting transactions between multiple counterparties. Peter explains how and why CCPs perform this function.

Central Counterparties, or CCPs, reduce settlement and credit risk and costs by netting transactions between multiple counterparties. Peter explains how and why CCPs perform this function.

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What are Central Counterparties (CCPs)?

1 min 53 secs

Overview

Central Counterparties (CCPs) are an essential entity for derivative trades in certain markets. They are successful in reducing risk, but can constitute a systemic risk under extreme conditions.

Key learning objectives:

  • Define CCPs and novation

  • Explain the significance of CCPs in the derivatives market

  • List examples of major CCPs

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Summary
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