IDEAS home Printed from https://ideas.repec.org/a/boe/qbullt/0106.html
   My bibliography  Save this article

Central counterparties: what are they, why do they matter and how does the Bank supervise them?

Author

Listed:
  • Rehlon, Amandeep

    (Bank of England)

  • Nixon, Dan

    (Bank of England)

Abstract

The Government introduced major changes to the system of financial regulation in the United Kingdom in April 2013, including creating the Financial Policy Committee and transferring significant new supervisory responsibilities to the Bank. As part of this, the Bank is now responsible for the supervision of central counterparties, or CCPs. This article explains what CCPs are, setting out their importance for the financial system — including the benefits they bring and some of the risks they could present if not properly managed. It also summarises the Bank’s approach to supervising CCPs and describes some of the key priorities the Bank will be pursuing.

Suggested Citation

  • Rehlon, Amandeep & Nixon, Dan, 2013. "Central counterparties: what are they, why do they matter and how does the Bank supervise them?," Bank of England Quarterly Bulletin, Bank of England, vol. 53(2), pages 147-156.
    • Handle: RePEc:boe:qbullt:0106
    as

    Download full text from publisher

    File URL: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2013/central-counterparties-what-are-they-why-do-they-matter-and-how-does-the-boe-supervise-them.pdf?la=en&hash=3D7AFAEA1E84FAAEC803D92D02BD069E8D5F4943
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elliott, David, 2013. "Financial Stability Paper No 20: Central counterparty loss-allocation rules," Bank of England Financial Stability Papers 20, Bank of England.
    2. Murphy, Emma & Senior, Stephen, 2013. "Changes to the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 53(1), pages 20-28.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivana Ruffini, 2015. "Central Clearing: Risks and Customer Protections," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 90-100.
    2. Huszár, Zsuzsa R. & Prado, Melissa Porras, 2019. "An analysis of over-the-counter and centralized stock lending markets," Journal of Financial Markets, Elsevier, vol. 43(C), pages 31-53.
    3. Tucker, Paul & Hall, Simon & Pattani, Aashish, 2013. "Macroprudential policy at the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 192-200.
    4. Gracie, Andrew & Chennells, Lucy & Menary, Mark, 2014. "The Bank of England’s approach to resolving failed institutions," Bank of England Quarterly Bulletin, Bank of England, vol. 54(4), pages 409-418.
    5. Martin D. Gould & Nikolaus Hautsch & Sam D. Howison & Mason A. Porter, 2020. "Counterparty Credit Limits: The Impact of a Risk-Mitigation Measure on Everyday Trading," Applied Mathematical Finance, Taylor & Francis Journals, vol. 27(6), pages 520-548, November.
    6. Jonathan Carroll & Ashwin Clarke, 2014. "The Equity Securities Lending Market," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 31-42, December.
    7. Manning, Stuart, 2014. "The Bank of England as a bank," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 129-136.
    8. Burrows, Oliver & Cumming, Fergus, 2015. "Mapping the UK financial system," Bank of England Quarterly Bulletin, Bank of England, vol. 55(2), pages 114-129.
    9. Ashwin Clarke & Paul Ryan, 2014. "Non-dealer Clearing of Over-the-counter Derivatives," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 77-88, March.
    10. Jin-Wook Chang, 2019. "Collateralized Debt Networks with Lender Default," Finance and Economics Discussion Series 2019-083, Board of Governors of the Federal Reserve System (U.S.).
    11. Boudiaf, Ismael Alexander & Scheicher, Martin & Vacirca, Francesco, 2023. "CCP initial margin models in Europe," Occasional Paper Series 314, European Central Bank.
    12. Rahman, Arshadur, 2015. "Over-the-counter (OTC) derivatives, central clearing and financial stability," Bank of England Quarterly Bulletin, Bank of England, vol. 55(3), pages 283-294.
    13. Balluck, Kushal, 2015. "Investment banking: linkages to the real economy and the financial system," Bank of England Quarterly Bulletin, Bank of England, vol. 55(1), pages 4-22.
    14. Christian Julliard & Gabor Pinter & Karamfil Todorov & Kathy Yuan, 2022. "What drives repo haircuts? Evidence from the UK market," BIS Working Papers 1027, Bank for International Settlements.
    15. Liu, Zijun & Quiet, Stephanie & Roth , Benedict, 2015. "Banking sector interconnectedness: what is it, how can we measure it and why does it matter?," Bank of England Quarterly Bulletin, Bank of England, vol. 55(2), pages 130-138.
    16. Davey, Nick & Gray, Daniel, 2014. "How has the Liquidity Saving Mechanism reduced banks’ intraday liquidity costs in CHAPS?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 180-189.
    17. Matt Gibson, 2013. "Recovery and Resolution of Central Counterparties," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 39-48, December.
    18. Gould, Martin D. & Hautsch, Nikolaus & Howison, Sam D. & Porter, Mason A., 2017. "Counterparty credit limits: An effective tool for mitigating counterparty risk?," CFS Working Paper Series 581, Center for Financial Studies (CFS).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liliana DONATH & Veronica MIHUTESCU CERNA & Ionela OPREA, 2014. "Financial Supervision Arrangements: Experience And Perspectives," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 0(Special i), pages 25-30, September.
    2. Wenqian Huang, 2019. "Central counterparty capitalization and misaligned incentives," BIS Working Papers 767, Bank for International Settlements.
    3. Boissel, Charles & Derrien, François & Ors, Evren & Thesmar, David, 2017. "Systemic risk in clearing houses: Evidence from the European repo market," Journal of Financial Economics, Elsevier, vol. 125(3), pages 511-536.
    4. Ms. Froukelien Wendt, 2015. "Central Counterparties: Addressing their Too Important to Fail Nature," IMF Working Papers 2015/021, International Monetary Fund.
    5. Darrell Duffie, 2014. "Financial Market Infrastructure: Too Important to Fail," Book Chapters, in: Martin Neil Baily & John B. Taylor (ed.), Across the Great Divide: New Perspectives on the Financial Crisis, chapter 11, Hoover Institution, Stanford University.
    6. Christian Kubitza & Loriana Pelizzon & Mila Getmansky Sherman, 2024. "Loss Sharing in Central Clearinghouses: Winners and Losers," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 14(2), pages 237-273.
    7. England, David & Hebden, Andrew & Henderson, Tom & Pattie, Tom, 2015. "The Agencies and 'One Bank'," Bank of England Quarterly Bulletin, Bank of England, vol. 55(1), pages 47-55.
    8. Gabrielle Demange & Thibaut Piquard, 2021. "On the market structure of central counterparties in the EU," Working Papers halshs-03107812, HAL.
    9. Farag, Marc & Harland , Damian & Nixon, Dan, 2013. "Bank capital and liquidity," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 201-215.
    10. Hills, Robert & Hooley, John & Korniyenko, Yevgeniya & Wieladek, Tomasz, 2015. "International banking and liquidity risk transmission: lessons from the United Kingdom," Bank of England working papers 562, Bank of England.
    11. Footman, John, 2014. "The Court of the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 28-36.
    12. Nicolò Fraccaroli & Alessandro Giovannini & Jean-François Jamet & Eric Persson, 2023. "Central Banks in Parliaments: A Text Analysis of the Parliamentary Hearings of the Bank of England, the European Central Bank, and the Federal Reserve," International Journal of Central Banking, International Journal of Central Banking, vol. 19(2), pages 543-600, June.
    13. Vincent Bignon & Guillaume Vuillemey, 2020. "The Failure of a Clearinghouse: Empirical Evidence [Counterparty risk externality: centralized versus over-the-counter markets]," Review of Finance, European Finance Association, vol. 24(1), pages 99-128.
    14. Arrowsmith, Martin & Griffiths, Martin & Franklin, Jeremy & Wohlmann, Evan & Young, Garry & Gregory, David, 2013. "SME forbearance and its implications for monetary and financial stability," Bank of England Quarterly Bulletin, Bank of England, vol. 53(4), pages 296-303.
    15. Kubitza, Christian & Pelizzon, Loriana & Getmansky, Mila, 2018. "The pitfalls of central clearing in the presence of systematic risk," ICIR Working Paper Series 31/18, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    16. Radoslav Raykov, 2016. "To Share or Not to Share? Uncovered Losses in a Derivatives Clearinghouse," Staff Working Papers 16-4, Bank of Canada.
    17. Davey, Nick & Gray, Daniel, 2014. "How has the Liquidity Saving Mechanism reduced banks’ intraday liquidity costs in CHAPS?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 180-189.
    18. Demange, Gabrielle & Piquard, Thibaut, 2023. "On the choice of central counterparties in the EU," Journal of Financial Markets, Elsevier, vol. 64(C).
    19. Andrew Godwin & Timothy Howse & Ian Ramsay, 2017. "A jurisdictional comparison of the twin peaks model of financial regulation," Journal of Banking Regulation, Palgrave Macmillan, vol. 18(2), pages 103-131, April.
    20. Lannoo, Karel, 2017. "Derivatives Clearing and Brexit: A comment on the proposed EMIR revisions," ECMI Papers 13150, Centre for European Policy Studies.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boe:qbullt:0106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publications Group (email available below). General contact details of provider: https://edirc.repec.org/data/boegvuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.