The Clearing Agencies maintain comprehensive market risk management programs designed to, among other things, effectively:
- manage market risk exposures to their clearing participants.
- manage market risk exposures arising from their payment, clearing and settlement processes.
- limit the assets they accept as collateral to those with low credit, liquidity and market risks.
- set and enforce appropriately conservative haircuts and concentration limits on the assets they accept as collateral.
In addition, as central counterparties, NSCC and FICC also include risk-based margin systems in their risk management programs designed to, among other things:
- cover market risk exposures to their clearing participants.
- produce margin levels commensurate with the risk and attributes of each product, portfolio and market.
- mark participant positions to market.
- calculate margin sufficient to cover the potential future exposure to their participants in the interval between the last margin collection and the closeout of positions following a participant default.
LEARN MORE ABOUT MANAGING RISK