Univ.-Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.A CCP link is a cooperative framework that enables two independent clearing houses to handle eligible transactions across their respective participant networks. It gives a participant access to clearing through its existing CCP rather than requiring direct membership of the other clearing house.
Clearing is the post-trade process that prepares obligations for completion by verifying trades, calculating what each participant is responsible for, and reducing offsetting amounts where appropriate. In derivatives markets, it also involves routinely revaluing open contracts and updating the collateral or margin needed to support them before settlement occurs.
A clearing fund is a shared financial resource maintained within a central clearing system to manage losses that remain after a member fails and its available collateral has been applied. Contributions from clearing members or other eligible guarantors can be drawn on under the system's default procedures to help complete affected trades and maintain payment… read more »
A central counterparty (CCP) is a clearing institution that becomes the common contractual partner for trades accepted into its system. It replaces direct exposure between the original trading parties with separate obligations between each party and the CCP, while using collateral, netting, and default-management procedures to control the resulting risks.