Managing Client Clearing Risk - Monitoring & Client Suspension
General Clearing Members (GCM) are exposed to the risk of default of their non-clearing (NCM) clients. This is the same kind of exposure that the CCP has on its clearing members. While the CCP will monitor risk on the CMs, it does not assess the risk the GCM runs on his NCMs – this is expected to be the responsibility of the GCM itself. In fact, many GCMs have in place sophisticated risk management systems that help them to monitor and mitigate this risk.
Risk management involves, first of
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