Central counterparty

In banking and finance, a central counterparty denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing of payments is necessary to turn the promise of payment (for example, in the form of a cheque or electronic payment request) into actual movement of money from one bank to another.

In trading, clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction. It involves the management of post-trading, pre-settlement credit exposures to ensure that trades are settled in accordance with market rules, even if a buyer or seller should become insolvent prior to settlement. Processes included in clearing are reporting/monitoring, risk margining, netting of trades to single positions, tax handling, and failure handling.

Largest Central Counterparties

CCP	Type	Assets Under Management (US$ billion)
DTCC	Securities Clearing	1,700,000.0
Euroclear	Securities Clearing	23,000.0
Eurex	Securities Clearing	15,000.0
CLS Group	Currency Clearing	10,300.0
Intercontinental Exchange (ICE Clear)	Commodities Clearing	10,000.0
State Street Bank & Trust	Custodian Facility	2,345.0
Bank of New York Mellon	Custodian Facility	1,700.0
LCH Clearnet	Securities Clearing	1,000.0
European Multilateral Clearing Facility (EMCF)	Securities Clearing	362.7
Cirrus (Mastercard)	Interbank Network	325.0
Plus (Visa)	Interbank Network	309.6
Options Clearing Corporation	Derivatives Clearing	199.9
CME Clearing	Commodities Clearing	54.2
Clearstream	Securities Clearing	13.9
BGC Partners	Custodian Facility	1.7
ICAP	Custodian Facility	1.3

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