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Quantitative Finance · Begrippenlijst

Wat is Central counterparty and novation?

Ook bekend als: central counterparty · novation

Definition 5.4 Markets I: The Ecosystem and Exchange-Traded Markets · Hoofdstuk 5 — Clearing and Settlement

A central counterparty (CCP), or clearing house, interposes itself in every trade it accepts: by novation the contract between buyer and seller is replaced by two contracts, one between the buyer and the CCP and one between the CCP and the seller. Each member then has a single counterparty, whatever the number of firms it traded with.

Six members before and after novation. The CCP removes the web, and concentrates in one node all the risk that was spread over it.
Figure 5.2. Six members before and after novation. The CCP removes the web, and concentrates in one node all the risk that was spread over it.
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