Central clearing creates repo concentration risk – research
‘Window dressing’ is a uniquely European phenomenon, Bank of Italy study finds
Client clearing chains are both “challenge and innovation”, and could pose a concentration risk in repo markets, new research from the Bank of Italy finds.
Some financial entities do not meet central counterparty (CCP) participation requirements, and must therefore access a CCP through a clearing member. This leads to chains of firms indirectly accessing central clearing, researchers Cristina Di Luigi, Antonia Perrella and Alesso Ruggieri find.
But these clearing chains pose risks to financial
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