Issues Related to Central Counterparty Cearing: Concluding Remarks
I have the pleasure to conclude a very successful conference, a conference that has been special in many respects. First, this conference was jointly organized by the European Central Bank (ECB) and the Federal Reserve Bank of Chicago (Chicago Fed). As such, it marks another fruitful example of cooperation among central banks across the Atlantic. Second, it has featured research on central counterparties (CCPs), a topic that has not yet received a great deal of attention from academic researchers. I hope that this conference has contributed to stimulating more research on this very important subject. Finally, it has brought together market participants, public authorities, and academics. I am in no doubt that discussions involving people from these very different groups are beneficial for all of them. However, I am also aware that it is not always easy to initiate such discussions. This conference has also been very successful in this respect. I wish to thank the organizers of this conference at the Chicago Fed and the ECB for all their hard work.
Central counterparties play an important role in many financial markets. They interpose themselves between the buyer and the seller of financial assets, acting as the buyer to every seller and as the seller to every buyer of a specified set of contracts. This process mitigates counterparty credit risk, which is the risk that one party of a trade suffers losses because the other party cannot fulfill its obligations from the trade. Through multilateral netting, central counterparties enhance liquidity and reduce liquidity costs. Finally, central counterparties ensure post-trade anonymity.