Decentralized assets trading, centralized clearing and systemic risk

  • Julien, Benoit (Primary Chief Investigator (PCI))
  • Roger, Guillaume (Chief Investigator (CI))

Project: Research

Project Details

Project Description

It is said one of the main factors that exacerbated the severity of the 2007-09 financial crisis was the lack of
transparency of over-the-counter (OTC) financial markets. In response regulators around the world decided to
mandate centralised clearing of derivatives traded OTC, with the view this prescription would reduce system-wide
risk. This research projects aims to study the economic consequences in terms of market participation, volumes of
trade and prices of such a regulatory shift. Specifically it will study the behavioural impact of shifting risk from
market participants to clearinghouses and suggest remedial policies that could be implemented by clearinghouses
to control the risk appetite of market participants.
Effective start/end date5/06/174/06/21