How to Analyze the Costs and Benefits of Introducing a Central Counterparty:
Central counterparties (CCPs) require a certain level of market development to operate in a safe and efficient manner. This note presents a practical cost-benefit analysis framework for country authorities to decide whether this specific type of financial market infrastructure will benefit their mar...
Gespeichert in:
| Körperschaft: | |
|---|---|
| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
The World Bank
2022
|
| Schriftenreihe: | Other Financial Sector Study
|
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | Central counterparties (CCPs) require a certain level of market development to operate in a safe and efficient manner. This note presents a practical cost-benefit analysis framework for country authorities to decide whether this specific type of financial market infrastructure will benefit their markets, financial institutions, and investors, or whether the costs of a CCP are higher than its benefits. The note discusses three key questions: (1) Are the necessary preconditions met-for example, is the market sufficiently liquid to enable the CCP to calculate margin; (2) Will a CCP support a well-functioning market; and (3) Is there a positive business case Introducing a CCP is recommended only when all questions can be answered in the affirmative. Otherwise, alternative clearing models should be considered, such as bilateral clearing between financial institutions, multilateral netting with a guarantee, prefunding, or clearing through a CCP abroad. Often, introducing a CCP uncovers a chicken-and-egg problem whereby a CCP will positively impact market liquidity while at the same time a minimum level of market liquidity is a condition to set up a CCP. In such cases, the introduction of a CCP should be part of a comprehensive market development plan |
| Beschreibung: | 1 Online-Ressource |
| DOI: | 10.1596/37424 |
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| spellingShingle | How to Analyze the Costs and Benefits of Introducing a Central Counterparty Finance and Financial Sector Development Financial Economics Financial Regulation and Supervision Financial Structures Governance Macroeconomics and Economic Growth |
| title | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_auth | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_exact_search | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_exact_search_txtP | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_full | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_fullStr | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_full_unstemmed | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_short | How to Analyze the Costs and Benefits of Introducing a Central Counterparty |
| title_sort | how to analyze the costs and benefits of introducing a central counterparty |
| topic | Finance and Financial Sector Development Financial Economics Financial Regulation and Supervision Financial Structures Governance Macroeconomics and Economic Growth |
| topic_facet | Finance and Financial Sector Development Financial Economics Financial Regulation and Supervision Financial Structures Governance Macroeconomics and Economic Growth |
| url | https://doi.org/10.1596/37424 |
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