Can a Clearing House Default If Its Capital Is Depleted?

Yes, a clearing house can default, although it is an extremely rare and severe event. If a member default is so large that it exhausts the entire default waterfall, including the clearing house's own capital and all member contributions, the clearing house would be unable to meet its obligations.

At this point, it would be declared insolvent and enter a special resolution regime managed by regulators. The goal of this regime would be to wind down the clearing house in an orderly manner to prevent a wider systemic crisis.