Knowledge Base

← Post-Trade and Market Infrastructures

Questions

Which principle ensures that payment and delivery of securities occur simultaneously?

Principle of netting
Principle of DVP (Delivery versus Payment)
Principle of novation
Principle of waterfall default

Which mechanism reduces intraday liquidity needs by 90 to 95%?

Novation
Multilateral netting
DVP (Delivery versus Payment) settlement
Counterparty default management

What percentage of a CCP's own capital must be committed as a last resort to cover counterparty defaults?

10%
25%
50%
75%

What is the primary function of a central counterparty (CCP) in the novation process?

Ensure financial market liquidity
Transform a bilateral transaction into two separate contracts with the CCP
Reduce intraday liquidity needs
Coordinate the transfer of securities and cash

The Settlement Finality Directive 98/26/EC guarantees the irrevocability of transactions recorded in the clearing system even in the event of a participant's insolvency.

True
False

The positions cleared through LCH SwapClear for Lehman Brothers were resolved in three weeks thanks to the mobilization of a crisis committee.

True
False

Default waterfall

Click to see answer

Categorize items by dragging them to the appropriate zones

Items to categorize:

Central counterparty
Novation
Multilateral netting
Netting
Default management
Default waterfall
Settlement-delivery
DVP
Categories:

Key functions

Key mechanisms