2ĬCP members are financial institutions that wish to clear trades through a central counterparty in order to eliminate the counterparty credit risk arising from their trade with a bilateral counterparty. How do they manage and mitigate those risks?Ī central counterparty (“CCP”) is a financial institution defined by the Bank for International Settlements (“BIS”) as, “a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts.” A CCP is also known in the US as a Derivatives Clearing Organization (“DCO”), and is regulated as such by the Commodity Futures Trading Commission (“CFTC”).What are CCPs, and what role do they play?.This article addresses the following questions: Understanding Central Counterparties (CCPs)Ĭentral counterparty clearing houses, or more simply central counterparties (“CCPs”), have emerged from the 2008 financial crisis as lynchpins of the global derivatives markets, and therefore, a critical part of the infrastructure of the global financial system.

What is cccp