What Is a Central Counterparty Clearing House (CCP)?

A central counterparty clearing house (CCP) is an entity that helps facilitate trading in European derivatives and equities markets, aiming to introduce efficiency and stability by reducing various risks for traders. CCPs act as intermediaries in transactions, guaranteeing trade terms and collecting money from traders to cover potential losses. They also provide privacy protection, reduce the number of transactions being settled, and are evaluated based on clearing and settlement efficiency by rating agencies like Moody’s. Additionally, blockchain technology offers potential benefits for CCPs, such as risk reduction and increased efficiency.
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