Skip to main content

What Happens to Open Positions of a Defaulted Member Firm?

The clearing house immediately attempts to hedge or liquidate the positions. Often, the positions are offered for auction to non-defaulting clearing members.

The goal is to transfer or close out the portfolio quickly and efficiently to minimize market disruption and loss realization. This process is governed by the clearing house's default management protocol.

What Is a ‘Guarantee Fund’ and How Is It Funded by CCP Members?
How Does the Clearing House Manage a Default by a Member Firm?
How Does a Clearinghouse Handle a Member’s Default?
What Is the “Waterfall” Structure of a CCP’s Financial Resources?