CCP Evaluation Framework

For asset managers who have material exposure in centrally cleared derivatives, clearing risks should be considered in a comprehensive counterparty risk management framework.

Failure of a counterparty can lead to losses in many different ways, including economic, reputational, time, effort and management focus. While there has been (and continues to be) a great deal of positive industry evolution since the Global Financial Crisis, the risk of counterparty failure remains. Even with increased use of central clearing for derivatives, the risk has not been eliminated, but rather it has shifted – making counterparty risk management an imperative for investment firms to appropriately assess and manage around the evolving landscape.

The purpose of the CCP Evaluation Framework is to help asset managers add central counterparty (CCP) evaluation into their process and serve as a tool for assessment efforts as firms develop a comprehensive counterparty risk management framework.

This framework and related narrative about the importance of managing counterparty risk were published by the Counterparty Risk Forum of the SIFMA Asset Management Group (SIFMA AMG).

 

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