How Does the CCP’s Default Fund Contribute to Systemic Stability?
The default fund is a pool of capital contributed by all clearing members, acting as a mutualized insurance layer. By providing a substantial financial buffer beyond individual member margins and the CCP's own capital, it ensures that the failure of one or even a few large members does not cascade into a systemic crisis across the financial market.
Glossar
CCP Default
Failure ⎊ A CCP Default signifies the ultimate failure of a Central Counterparty to fulfill its obligations to its clearing members following the default of one or more participants in the cryptocurrency or traditional options trading venue.
Default Fund
Fund ⎊ The Default Fund, within the context of cryptocurrency derivatives, options trading, and broader financial derivatives, represents a segregated pool of assets designated to cover potential losses arising from counterparty default.