What is Central Counterparty (CCP)?

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A Central Counterparty (CCP) is a financial institution that interposes itself between the two counterparties to a transaction, becoming the buyer to every seller and the seller to every buyer, thereby guaranteeing the performance of the trade and significantly mitigating counterparty credit risk in markets like treasury securities, bonds, and repos. CCPs are systemically important entities that manage risk through multilateral netting, margin requirements, and a default fund, ensuring stability in the global financial system.

Central Counterparty (CCP)

What is Central Counterparty (CCP)?

What is the primary function of a Central Counterparty (CCP) in the U.S. Treasury and Repo Markets, and how does it manage systemic risk?

How do Central Counterparties (CCPs) utilize margin and default funds to ensure the financial integrity of cleared transactions?

Why is the expansion of central clearing for U.S. Treasury securities, as mandated by the SEC, a critical development for market structure and liquidity?

What role could a Central Counterparty (CCP) play in the emerging market for Real World Asset (RWA) tokenization, particularly for tokenized bonds and treasury products?

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