How Much of Its Own Capital Is a Clearing House Typically Required to Contribute to the Default Waterfall?

The amount of capital a clearing house must contribute to the default waterfall is determined by regulation and its own risk management policies. Regulations often specify a minimum amount, which might be a fixed number or a percentage of the default fund.

The goal is to ensure the clearing house has a meaningful financial stake in the proper functioning of the clearing system. This "skin-in-the-game" contribution must be sufficient to incentivize robust risk management without being so large as to jeopardize the clearing house's viability.