Practice Question Set: Central Clearing

Topic Progress:

Chapter 6. Central Clearing Practice Question set contains 9 pages covering the following learning objectives:

* Provide examples of the mechanics of a central counterparty (CCP).

* Describe the role of CCPs and distinguish between bilateral and centralized clearing.

* Describe advantages and disadvantages of central clearing of OTC derivatives.

* Explain regulatory initiatives for the OTC derivatives market and their impact on central clearing.

* Compare margin requirements in centrally cleared and bilateral markets, and explain how margin can mitigate risk.

* Compare and contrast bilateral markets to the use of novation and netting.

* Assess the impact of central clearing on the broader financial markets.

* Identify and explain the types of risks faced by CCPs.

* Identify and distinguish between the risks to clearing members as well as non-members.

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