Moody鈥檚 offers CCP ratings
24 June 2015 New York
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Moody鈥檚 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. 鈥淭his increased channeling of financial market activity to the clearinghouse has made the role of the CCP critical to the health of the financial system.鈥�
Market participants have until 21 August to provide feedback on the proposed methodology.
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. 鈥淭his increased channeling of financial market activity to the clearinghouse has made the role of the CCP critical to the health of the financial system.鈥�
Market participants have until 21 August to provide feedback on the proposed methodology.
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