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CCPs and Banks: Different Risks, Different Regulations

Author

Listed:
  • David Hughes

    (Reserve Bank of Australia)

  • Mark Manning

    (Reserve Bank of Australia)

Abstract

Recent debate on the adequacy of regulatory standards for central counterparties (CCPs) has often drawn on the experience of bank regulation. This article draws out the essential differences between CCPs and banks, considering the implications of these differences for the regulatory approach. It argues that banks and CCPs affect systemic stability in different ways, with a CCP's systemic importance largely derived from its central role and a bank's systemic importance typically derived from the size and breadth of its activities. Any refinements to regulatory standards for CCPs that are drawn from bank regulation should not overlook these differences.

Suggested Citation

  • David Hughes & Mark Manning, 2015. "CCPs and Banks: Different Risks, Different Regulations," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 67-80, December.
    • Handle: RePEc:rba:rbabul:dec2015-08
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2015/dec/pdf/bu-1215-8.pdf
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    References listed on IDEAS

    as
    1. Penelope Smith & Nicholas Tan, 2015. "Total Loss-absorbing Capacity," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 59-66, December.
    2. Alexandra Heath & Gerard Kelly & Mark Manning, 2015. "Central Counterparty Loss Allocation and Transmission of Financial Stress," RBA Research Discussion Papers rdp2015-02, Reserve Bank of Australia.
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    Cited by:

    1. Mr. Manmohan Singh & Dermot Turing, 2018. "Central Counterparties Resolution—An Unresolved Problem," IMF Working Papers 2018/065, International Monetary Fund.

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