What Is the Difference between a CCP and a Settlement Institution? ▴ Learn

What Is the Difference between a CCP and a Settlement Institution?

A Central Clearing Counterparty (CCP) manages counterparty credit risk by guaranteeing the performance of the trade (novation) and manages margin/collateral. A Settlement Institution (like a central bank or a commercial settlement system) handles the final transfer of funds and assets.

While they work together, the CCP is focused on risk management, and the Settlement Institution is focused on the mechanical transfer of value.

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