Default Management

Fed Official Slams ‘Fantasy’ Of CCP Default Management

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Dee Dervish from Formicary adds his thoughts on the Fed's view of how banks are roped in to help with CCP default management.

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Harvard Law School | The Dodd-Frank Act’s Maginot Line: Clearinghouse Construction

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Earlier today, Mark J Roe published an abstract to his paper on clearing houses on the Harvard Law Blog (a link to which is here. The full paper can be downloaded here).

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LCH to 'verticalise' their General Default Fund

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A note from LCH below explains that they intend to complete the process of aligning the default fund of each clearing business vertically, and end the horizontal approach of having a general default fund. This I assume more closely aligns the size of the risk for each service with it's own DF, and also aligns members with their obligations without cross-subsidy or calls upon the DF from other cleared business areas. LCH.Clearnet Group - Member Notices - Circulars - 2013-03-27 Restructuring of the LCH.Clearnet Ltd.

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LCH Default Waterfall Update | Invoicing Back

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LCH published a member note (here) regarding "invoicing back" which is component of resolving a default. There are two PDFs, of which the second sets out the order in which assets are used to fund the debts of a defaulting (direct) member, being:

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