The Economics of Central Clearing: Theory and Practice, by Dr. Craig Pirrong, University of Houston

Regulations requiring the clearing of certain OTC derivatives through central counterparties (CCPs) are causing a profound change in market structure and trading practices. This paper discusses how CCPs are structured and what effects increased use of them will have on the financial system. Craig Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business at the University of Houston. His research focuses on the economics of the organization of financial markets, including the economics of exchange and OTC markets, and the economics of clearing and other mechanisms for allocating counterparty credit risk. He has consulted widely with exchanges around the world, has testified before Congress on energy pricing, and has served as an expert witness in a variety of cases involving derivatives and commodities markets. He holds a Ph.D. in business economics from the University of Chicago.

Documents (1) for The Economics of Central Clearing: Theory and Practice, by Dr. Craig Pirrong, University of Houston

Remove Bureaucracy from Cross-margin Approvals

Cross-margining programs play a critical role in financial markets. By ensuring margin requirements more closely reflect the actual risk of a portfolio of products, they reduce liquidity strain and improve market efficiency, both of which will become even more important...

Joint Response on CCP Resolution

On September 7, ISDA and FIA responded to a Bank of England (BOE) discussion paper on central counterparty (CCP) resolution. The associations support greater clarity on valuation capabilities prior to a crisis scenario and the boundary between recovery and resolution,...