Business Case Studies & Business Publications

Central Counterparties

Hachem, Kinda

Technical Note

Central Counterparties

Hachem, Kinda

GEM-0265 | Published June 18, 2026 | 7 Pages Technical Note

Collection: Darden School of Business

Product Details

Clearinghouses have made a comeback as part of regulatory efforts to reform the trading of opaque derivatives and improve financial stability following the implosion of credit default swaps (CDS) during the 2008 financial crisis. This technical note covers the basics of clearing as well as the benefits and costs of requiring derivatives to be cleared through a central counterparty (CCP). This note is designed for use in an MBA elective on money and banking. It can serve as a technical supplement to a case on the rise and fall of CDS during the crisis or a case on a historical episode involving a clearinghouse. Alternatively, it can form the basis of its own theory-building class.

- Understand the basics of clearing and settlement. - Understand the role of clearinghouses and their CCP facilities in derivatives trading. - Explore the implications of clearinghouses and their CCP facilities for financial stability.