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At the End of the Waterfall – Resolvability of Central Counterparties

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Gárdos, P. At the End of the Waterfall – Resolvability of Central Counterparties. Credit and Capital Markets – Kredit und Kapital, 54(4), 505-531. https://doi.org/10.3790/ccm.54.4.505
Gárdos, Péter "At the End of the Waterfall – Resolvability of Central Counterparties" Credit and Capital Markets – Kredit und Kapital 54.4, 2021, 505-531. https://doi.org/10.3790/ccm.54.4.505
Gárdos, Péter (2021): At the End of the Waterfall – Resolvability of Central Counterparties, in: Credit and Capital Markets – Kredit und Kapital, vol. 54, iss. 4, 505-531, [online] https://doi.org/10.3790/ccm.54.4.505
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At the End of the Waterfall – Resolvability of Central Counterparties

Gárdos, Péter

Credit and Capital Markets – Kredit und Kapital, Vol. 54 (2021), Iss. 4 : pp. 505–531

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Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.54.4.505
Language
English
Pages
27
Keywords

Author Details

Péter Gárdos, PhD (ELTE Budapest) assistant professor, Eötvös Loránd University Department for Civil Law, Budapest, Hungary.

References

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  11. Braithwaite, J. (2016): The Dilemma of Client Clearing in the OTC Derivatives Markets, Eur Bus Org Law Rev, 2016/17, 355–378.  Google Scholar
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  13. Braithwaite, J./Murphy, D. (2017a): Get the balance right: private rights and public policy in the post-crisis regime for OTC derivatives, CMLJ, Vol. 12, No. 4 480–509.  Google Scholar
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  20. Chamorro-Courtland, C. (2012): The Trillion Dollar Question: Can a Central Bank Bail Out a Central Counterparty Clearing House Which is “Too Big to Fail”?, 6 Brook. J. Corp. Fin. & Com. L., 433–485.  Google Scholar
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  53. Norman, P. (2011): The Risk Controllers. Central Counterparty Clearing in Globalised Financial Markets (Wiley).  Google Scholar
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  119. Paddrik, M./Zhang S. (2020): Central Counterparty Default Waterfalls and Systemic Loss, Office of Financial Research Working Paper 20-04, https://www.financialresearch.gov/working-papers/files/OFRwp-20-04_central-counterparty-default-waterfalls-and-systemic-loss.pdf.  Google Scholar
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  124. Sayah, M. (2017): Counterparty Credit Risk in OTC Derivatives under Basel III, Journal of Mathematical Finance, 7, 1–38.  Google Scholar
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Abstract

After the prudential requirements introduced by EMIR in 2012, the European Union took a further step when it adopted a regulation in 2021 on the framework for the recovery and resolution of central counterparties. The regulation is based on the bank recovery and resolution directive of 2014. This paper provides a critical overview of the new regulation by focusing on the question of whether the bank resolution tools are useful and effective in the case of central counterparty resolutions.

Table of Contents

Section Title Page Action Price
Péter Gárdos: At the End of the Waterfall – Resolvability of Central Counterparties 1
Abstract 1
I. Introduction 1
II. The Brief Overview of the History and the Operation of Central Counterparties 3
1. From OTC Derivatives to Mandatory Clearing 3
2. The Functions of CCPs 5
III. Avoiding CCP Default 7
1. Distinguishing CCPs from Banks 8
2. Managing Risk under the EMIR 9
3. The Default Waterfall Rules 1
IV. Insolvency, Recovery and Resolution 1
1. Insolvency of CCPs 1
2. Recovery of CCPs 1
3. CCP Resolution Tools 1
4. Sale of Business and Bridge Institution Tools 1
5. No Creditor Worse Off 1
6. Access to Central Bank Liquidity 2
V. COVID-19 Perspectives 2
VI. Summary 2
References 2

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