BIS Review 2/2008  3  potential to reduce counterparty risk and to help keep this market open in stressful times. A clearing house offers the advantages of robust operational arrangements and clear workout procedures in the event of a default.
Without underestimating the complexities that this would involve, policy-makers could look for other markets that could benefit from being moved onto exchanges or into clearing houses. They could encourage such moves by establishing higher capital requirements for securities that trade outside of continuously open markets and by working to further risk-proof custodial banks.