Reports and Studies on Clearing

Clearing Arrangements for Exchange-Traded Derivatives
March 1997

This report was issued by the Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries. The report describes and analyses the arrangements used to settle trades executed on derivatives exchanges. It focuses, in particular, on the sources and types of risk in such arrangements and the approaches adopted to manage these risks. The report, which is analytical rather than prescriptive, identifies a number of potential weaknesses in clearing arrangements and sets out possible ways to remedy them. The chairman of the study group that prepared the report was Patrick Parkinson, Associate Director, Division of Research and Statistics, Board of Governors of the Federal Reserve System.

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