reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … elements can render central clearing harmful for a market participant's counterparty risk exposure regardless of the number of …

reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … elements can render central clearing harmful for a market participant's counterparty risk exposure regardless of the number of …

Through the lens of market participants' objective to minimize counterparty risk, we investigate central clearing in … suggest that central clearing always reduces counterparty risk for a sufficiently large number of clearing members. We show … that this is not the case - mostly because of loss sharing. Central clearing can increase counterparty risk, particularly …