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Industry news

Moody’s offers CCP ratings


24 June 2015 New York
Reporter: Mark Dugdale

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Image: Shutterstock
Moody’s has proposed a global methodology for rating central counterparties (CCPs) and invited market participants to provide feedback.



The proposed methodology considers CCPs' clearing member default-management capabilities and related structural protections, as well as their business and financial fundamentals and operating environments.



The new Clearing Counterparty Rating (CCR) will reflect Moody's opinion of a CCP's ability to meet its clearing and settlement obligations to its clearing members (probability of default) and the financial loss that would result if a CCP were unable to meet such obligations (severity of loss), according to the rating agency.



CCPs began to play a critical role in financial markets since regulators made it mandatory to centrally clear over-the-counter derivatives. “This increased channeling of financial market activity to the clearinghouse has made the role of the CCP critical to the health of the financial system.â€


Market participants have until 21 August to provide feedback on the proposed methodology.
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