's default and the ensuing default contagion. In unwinding the defaulter's positions, the CCP faces the price impact of …-mediated contagion and its amplification. A novel spatial measure captures the covariance between members' CDS holdings and the CDS being … predation – minimizing overall CCP and member losses. A dynamic simulation, calibrated to OTC market data, supports these …

value), the magnitude of default contagion, the price impact of pre- dation, and the disciplinary mechanism inherent in the …

profits, and how predation decreases the profits of all members, pushing banks to default. Furthermore, a hybrid CCP (vs …. current) structure provides a natural disciplinary mechanism for predation. Also, it more incentive compatible for the CCP, in …