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Global CCPs Report Record Liquidity Risk in Q1

Created at 15 Jul · 3:41 AM1 source↑ Market-relevant
IN SHORT

Several major central counterparties (CCPs) globally, including LCH in London and Paris, reported record or near-record levels of liquidity risk in the first quarter. LCH Ltd saw its largest payment obligation rise by 29.7% to €38.1 billion, while LCH SA's increased by 43% to €35 billion.

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Key Numbers

29.7%LCH Ltd payment obligation increase
€38.1 billionLCH Ltd largest payment obligation
43%LCH SA payment obligation increase
€35 billionLCH SA largest payment obligation

Who's Involved

LCH
Central counterparty reporting record liquidity risk
HKEX
Central counterparty reporting record liquidity risk
JSCC
Central counterparty reporting record liquidity risk
OCC
Central counterparty reporting record liquidity risk

↳ Why This Matters

Record liquidity risk measures at major CCPs indicate heightened potential for financial stress and could signal increased systemic risk within the global financial system.

Key facts

  • Several large global central counterparties (CCPs) reported record or near-record liquidity risk in Q1.
  • LCH Ltd's hypothetical largest payment obligation climbed 29.7% quarter-on-quarter to €38.1 billion.
  • LCH SA's largest payment obligation rose 43% to €35 billion.

Several large global central counterparties (CCPs) reported record or near-record measures of liquidity risk in the first quarter, according to analysis by Risk Quantum. LCH, operating CCPs in both London and Paris, set new highs. At LCH Ltd, the hypothetical largest payment obligation increased by 29.7% from the previous quarter to €38.1 billion ($43.7 billion). Simultaneously, LCH SA saw its equivalent measure climb by 43% to €35 billion.

Frequently asked questions

CCPs are financial institutions that act as intermediaries between buyers and sellers in financial markets, reducing counterparty risk by becoming the buyer to every seller and the seller to every buyer.

Liquidity risk for a CCP refers to the potential inability to meet its financial obligations as they come due, particularly in times of market stress or high trading volumes.

The report specifically mentioned LCH (London and Paris), HKEX, JSCC, and OCC as having reported record or near-record liquidity risk measures.

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How It Developed

Several large global CCPs reported record or near-record liquidity risk measures in Q1.
LCH Ltd's largest payment obligation increased 29.7% quarter-on-quarter to €38.1 billion.
LCH SA's largest payment obligation rose 43% to €35 billion.

Sources

T1
CCP liquidity risk measures hit highs in Q1Risk.net

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