Choosing a CCP: Strategic, Credit and Operational considerations is a two part module looking at the criteria involved in selecting a CCP to work with.
The first part is the strategic discussion around the most important considerations involved (eg: one CCP to optimise netting benefits or multiple to diversify risk?) and ensuring it meets your institution’s requirements, together with the broader debate around where CCPs sit in the Capital Markets Infrastructure and how things might play out if things go wrong (recovery and resolution regime, importance of CCP to the smooth running of the markets).
The second part is about Credit and Operational issues. How traditional cash flow forecasting measures are of limited benefit compared to understanding the rigour of a CCPs margining process, it’s payment waterfall, and the mutualisation of risk from its members.
Then we look at some of the collateral issues arising from dealing with CCPs, as well as some of the potential operational problems.
Finally, we look at some of the topics you might want to cover at a due diligence meeting with a CCP.
– Understand the principles of a CCP payment waterfall
– Understand that not all CCPs are equal, and where the differences lie
– Identify the key risk parameters in a CCP, including the mutualisation of risk
– Identify some of the potential operational issues involved
Who should attend
– Senior Managers from Front Office or Risk involved in selecting which CCPs to work with.
– Credit Analysts preparing credit reports on CCPs.
– Operations staff, either handling collateral calls or involved in CCP due diligence meetings
– Senior Risk Managers seeking a deeper understanding of the CCP market and how it differs from conventional credit analysis