What Are the Primary Mechanisms a CCP Uses to Manage a Member's Default? ⎊ Path

What Are the Primary Mechanisms a CCP Uses to Manage a Member’s Default?

The CCP utilizes a multi-layered "default waterfall" structure to cover losses. This includes the defaulting member's margin and default fund contributions, followed by the CCP's own capital, and then the non-defaulting members' default fund contributions.

The CCP also has the power to liquidate the defaulted member's positions in an orderly manner to minimize market disruption.

How Does the Default Waterfall of a CCP Protect Its Non-Defaulting Members?

What Is a “Default Waterfall” in the Context of a Clearing House?

What Is the ‘Default Waterfall’ in CCP Risk Management?

Explain the Concept of “Default Waterfall” in Clearing House Operations

What Is the Risk to the Clearing House If a Member Fails to Pay Variation Margin?

How Does the Clearing House Manage Systemic Risk Arising from Multiple Margin Calls?

How Does a CCP Manage the Default of a Clearing Member?

What Role Does the Clearing House’s Own Capital Play in a Default Scenario?