As the industry considers the appropriate ‘skin in the game’ for CCPs, the risk incentives created by the CCP’s contribution have largely been ignored
Skin in the game is at the core of a centrally cleared market and the most critical component of a CCP’s ability to manage the default of a clearing member. CME Clearing believes that skin in the game requirements must be developed on principles that incentivize market participants to manage the risks they create.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
