FICC has made it possible to bring a much larger percentage of the market into clearing, while still maintaining robust risk management standards.
The benefits include:
- Reduction of counterparty risk through CCP guarantee of the completion of settlement in a member default scenario.
- Balance sheet and capital relief opportunities. Centrally clearing these transactions at FICC could alleviate constraints on Members by enabling them to reduce capital usage via netting and lower risk weights in their risk-based capital ratios.
- Potential for growth of institutional investors’ on-loan balances and income as borrowers shift their demand to CCP channels.