Clearing house and Credit risk: Difference between pages

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''Funds transfer''
1.


(CH).
The risk that a counterparty will not settle an obligation for full value, either when due or at any time thereafter.


A formal or informal association of financial or other institutions that facilitates the exchange of items drawn on participants.
In exchange-for-value settlement systems, the risk is generally defined to include both replacement cost risk and principal risk.


This exists via a central location or central processing mechanism through which financial institutions agree to exchange payment instructions or other financial obligations (for example securities).


The institutions settle for items exchanged at a designated time based on the rules and procedures of the clearing house.  
2.


A weighted measure reflecting both the maximum possible amount of the credit loss (also known as the credit exposure), and the likelihood of such loss.


In some cases, the clearing house may assume significant counterparty, financial or risk management responsibilities for the clearing system.


== See also ==
* [[Banker's payment]]
* [[CCR]]
* [[Counterparty risk]]
* [[Covenant]]
* [[Credit default swap]]
* [[Credit derivative]]
* [[Credit exposure]]
* [[Credit risk diversification]]
* [[Capital risk]]
* [[Event risk]]
* [[Exchange-for-value system]]
* [[MCT]]
* [[Pre-settlement risk]]
* [[Price risk]]
* [[Prime bank]]
* [[Principal risk]]
* [[Replacement cost risk]]
* [[Risk mitigation]]
* [[Sovereign risk]]
* [[Putting a limit on losses]]


== See also ==
* [[Central counterparty]]
* [[Cleared derivatives]]
* [[Clearing House Automated Payment System]]  (CHAPS)
* [[Clearing House Interbank Payment System]]  (CHIPS)
* [[Clearing member]]
* [[Clearing system]]
* [[LME Clear]]
* [[RCH]]
* [[ROCH]]
* [[Uncleared derivatives]]
* [[USD CHATS]]


[[Category:Cash_management]]
===Other links===
[http://www.treasurers.org/node/4351 Credit risk, Will Spinney, ACT 2008]
 
[[Category:Manage_risks]]

Revision as of 20:52, 4 August 2016

1.

The risk that a counterparty will not settle an obligation for full value, either when due or at any time thereafter.

In exchange-for-value settlement systems, the risk is generally defined to include both replacement cost risk and principal risk.


2.

A weighted measure reflecting both the maximum possible amount of the credit loss (also known as the credit exposure), and the likelihood of such loss.


See also


Other links

Credit risk, Will Spinney, ACT 2008

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