Risk management is a vital benefit of CCP clearing  In the trade
life cycle, central counterparties (CCPs) play a critical role
in post-trade management.  After a trade has been negotiated,
submitted and confirmed, a CCP takes on the counterparty risks
by standing between two counterparties through novation, nets
offsetting transactions between multiple counterparties, and
provides ongoing risk and collateral management until the end of
the transaction’s term. Typically, a CCP calculates margins and
conducts margin calls to its members, requiring collateral
deposits for the margins. It independently conducts valuation of
the trades and collateral, and monitors the credit worthiness of
the counterparties.  CCPs also provide members with reports that
detail the transaction information, novation status, netted
positions and margin information. The reports can be used by the
back office and risk management team in the participating firms
to perform reconciliations and cover the resulting margin calls.
Risk manag