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Articles tagged by default

FIA Updates CCP Position Paper Following Nordic Default The Futures Industry Association (FIA) has released updated recommendations to improve clearinghouse risk management following recent market developments. The developments in question are the placing of a member of Nasdaq Clearing’s Nordic market in default in September. The losses were sufficiently large to exceed the margin provided by the defaulter and the CCP’s own skin in the game and required the use of the commodities default fund. This was the first use of a default fund by a major CCP since a default on KRX, the South Korean exchange, in 2013.
ISDA Releases Best Practice for CCPs in Wake of Nasdaq Default The International Swaps and Derivatives Association (ISDA) has published a set of best practices for central counterparties (CCPs), aimed at ensuring greater consistency in risk practices at CCPs across the globe. The recommendations follow a default at Nasdaq Clearing last September, which exceeded the defaulting member’s margin and default fund contribution and required the use of mutualised resources – the second such event in five years. The paper highlights steps that can be taken to minimise the potential for a member default to impact other members and the financial system as a whole, except in an extreme stress event.