Even in term of effectiveness of the CCP in reducing exposures, a recent paper concludes that introducing a CCP for a particular asset class is helpful if the number of dealers is sufficiently large relative to the exposure-weighted number of other asset classes that continue to be bilaterally netted; for plausible cases, adding a CCP for one class of derivatives such as credit default swaps (CDS) can actually reduce netting efficiency and thereby lead to an increase in collateral demands and average exposure to counterparty default.
1 As the participants are aware, the Reserve Bank has favored a CCP model for settlement of forex and government securities trade and intend to extend this to OTC interest rate swaps and forwards. Systemic risk measurement Like any other risk category, the first step towards regulating systemic risk is to identify its source and measure it.