Instructional Video: Central Clearing

Topic Progress:

This 35-minute instructional video covers two chapters:

Chapter 5: Exchanges, OTC Derivatives, DPC’s and SPV’s

Describe how exchanges can be used to alleviate counterparty risk.
Explain the developments in clearing that reduce risk.
Compare exchange-traded and OTC markets and describe their uses.
Identify the classes of derivatives securities & explain the risk associated with them.
Identify risks associated with OTC markets & explain how risks can be mitigated.

Chapter 6: Central Clearing

Provide examples of the mechanics of a central counterparty (CCP).
Describe advantages and disadvantages of central clearing of OTC derivatives.
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 and nonmembers.
Identify and evaluate lessons learned from prior CCP failures.

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