Clearing overview - CCP: Difference between revisions

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== Dramatis Personnae ==
*{{ccp|Broker}}
*{{ccp|Clearinghouse}} - the {{ccp|Swap Execution Facility}}, being the multilateral or other trading facility, system or platform, including any communication network or auction facility, permitted under applicable law. Question: what counts as a {{ccp|Swap Execution Facility}} for the purposes of {{ccp|Applicable Law}}?
*{{ccp|Clearing member}}
*{{ccp|Dealer}}
*{{ccp|End user}}


== Concepts ==
*{{ccp|Cleared trades}} versus {{ccp|non-cleared trades}}
*{{ccp|Margin}} and {{ccp|collateral}}, and [[net margining - CCPP|net]] versus [[gross margining - CCP|gross margining]].
*{{ccp|Agent}} versus {{ccp|Principal}}


{{CCPboilerplate}}
{{tabletop}}
|'''[[Margin]] Type'''
|'''Transfer Type'''
|'''Client Risk<br>
([[Broker]])'''
|'''Client Risk<br>
([[Bank]]/[[Custodian]])'''
|'''Client Risk
([[Intermediary]])'''
|'''Broker Risk
([[Bank]]/[[Custodian]])'''
|'''Broker Risk
([[Intermediary]])'''
|-
|Cash
|Outright transfer
|'''{{font colour|red|Yes}}'''
|'''{{font colour|green|No}}''' - it's the [[Broker]]'s bank.
|Depends on [[limited recourse]]
|'''{{font colour|red|Yes}}'''
|Depends on [[limited recourse]]
|-
|Cash
|[[Client money]]
|'''{{font colour|green|No}}'''
|'''{{font colour|red|Yes}}''' – it is client’s bank
|Generally '''{{font colour|red|Yes}}''' but limited recourse language will help
|'''{{font colour|green|No}}'''
|Generally '''{{font colour|red|Yes}}''' but limited recourse language will help
|-
|[[Securities]]
|[[Outright transfer]]
|'''{{font colour|red|Yes}}'''
|'''{{font colour|green|No}}''' - it's a custody asset.
|'''{{font colour|red|Yes}}''', if [[limited recourse]]
|'''{{font colour|green|No}}'''
|'''{{font colour|green|No}}'''
|-
|[[Securities]]
|[[Pledge]]
|'''{{font colour|green|No}}''', unless a right of [[rehypothecation]], in which case '''{{font colour|red|Yes}}'''.
|'''{{font colour|green|No}}'''
|If re-pledged: '''{{font colour|green|No}}'''. If [[Rehypothecate|rehypothecated]]: Depends on [[limited recourse]].
|'''{{font colour|green|No}}'''
|Depends on [[limited recourse]].
{{tablebottom}}
 
 
 
{{a|brokerage|}}

Revision as of 16:15, 30 April 2019


Margin Type Transfer Type Client Risk

(Broker)

Client Risk

(Bank/Custodian)

Client Risk

(Intermediary)

Broker Risk

(Bank/Custodian)

Broker Risk

(Intermediary)

Cash Outright transfer Yes No - it's the Broker's bank. Depends on limited recourse Yes Depends on limited recourse
Cash Client money No Yes – it is client’s bank Generally Yes but limited recourse language will help No Generally Yes but limited recourse language will help
Securities Outright transfer Yes No - it's a custody asset. Yes, if limited recourse No No
Securities Pledge No, unless a right of rehypothecation, in which case Yes. No If re-pledged: No. If rehypothecated: Depends on limited recourse. No Depends on limited recourse.


Brokerage Anatomy™
FIA/ISDA documentation |
Trading capacities: Principal | Undisclosed principal Riskless principal | Agent | Undisclosed agent

Broker types: Broker | Dealer | Broker/dealer | Executing broker | Clearing broker | Prime broker | FCM | CCP

Clearing: Clearing overview | How clearing works | What gets cleared? | Who clears? | Clearing documentation
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