Interoperability

"Interoperating with other CCPs is a condition we have offered to every trading venue we clear for. We are glad that we have arrived at a safe and scalable solution with regulators and interoperating CCPs that will give market participants a choice on where to clear their trades."
-- Diana Chan, Chief Executive Officer, EuroCCP

What is Interoperability?

Interoperability provides trading firms with the ability to select a CCP of their choice from a number of valid alternatives. To interoperate, CCPs establish arrangements with one another so that a user of one CCP can execute and clear a trade with a counterparty that has chosen another.

The Case for Interoperability

Interoperability introduces competition to clearing. Competition helps reduce cost, improve service quality and encourages innovation.

When there is full and effective competition among CCPs, users can choose to have trades cleared by their CCP of choice. When users can direct their trades to be cleared by one CCP regardless of where the trade is executed, it reduces their costs and risks.

Large financial firms’ defaults would be managed more centrally in fewer CCPs, thereby reducing overall risk in the financial system.