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Opening Remarks: Public Policy Symposium on OTC Derviatives Clearing

A speech delivered by Charles Evans before the Public Policy Symposium on OTC Derivative Clearing on September 3, 2010, in Chicago, IL.
Speech , Paper 45

Taking a Deep Dive into Margins for Cleared Derivatives

Central counterparties (CCPs) are institutions that become the buyer to every seller and seller to every buyer in cleared markets. By design, CCPs have a matched book of positions. As a result, their liabilities to clearing members with winning positions are exactly matched by incoming payments from those on the losing side of positions.
Chicago Fed Letter

Working Paper
A Tale of Four Tails: Inflation, the Policy Rate, Longer-Term Rates, and Stock Prices

We analyze empirical links between the perceived tail-risk of inflation, the policy rate, longer-term interest rates, and equity prices in the U.S. Their simultaneous changes enable us to distinguish between a systematic and "exogenous" response to monetary-policy news. And, those tail risks' co-movements are accounted for in quantifying the magnitude and persistence of their responses to key shocks. We find that: (i) in the medium-term, all four tail risks respond significantly and contemporaneously to domestic and foreign monetary-policy announcements, except for the equity tail risk to ...
Working Paper Series , Paper WP-2017-26

SOFR and the transition from LIBOR: remarks at the SIFMA C&L Society February Luncheon, New York City

Remarks at the SIFMA C&L Society February Luncheon, New York City.
Speech , Paper 307

The LIBOR Countdown Has Not Stopped

Remarks at the IMN Virtual Investors' Conference on LIBOR.

Journal Article
Can Broader Access to Direct CCP Clearing Reduce the Concentration of Cleared Derivatives?

In November 2008, at the height of the global financial crisis, leaders from the Group of Twenty (G20) nations, representing the world’s largest economies, convened in Washington, DC, to develop a new regulatory framework to help foster financial stability. They came out of that Washington summit with several noteworthy ideas.1 One was to strengthen over-the-counter (OTC) derivatives markets, where defaults had been serious problems during the financial crisis. In particular, G20 leaders agreed to move more of this business onto regulated exchanges and central counterparties (CCPs) as a way ...
Economic Perspectives , Volume 43 , Issue 3 , Pages 1-27

What’s the Potential Impact of Force Majeure Claims on Financial Stability?

This article examines the potential aggregate impact on financial stability of several bilateral force majeure claims filed at approximately the same time in one or more markets. One and a half years after the pandemic started, I take stock of the developments involving force majeure claims thus far, and conclude that the likelihood of these claims creating a systemic threat to financial stability is low.
Chicago Fed Letter , Issue 459 , Pages 7

Journal Article
The failure resolution of Lehman Brothers

This study examines the resolution of Lehman Brothers Holdings Inc. in the U.S. Bankruptcy Court in order to clarify the sources of complexity in its resolution and to inform the debate on appropriate resolution mechanisms for financial institutions. The authors focus on the settlement of Lehman?s creditor and counterparty claims, especially those relating to over-the-counter (OTC) derivatives, where much of the complexity of Lehman?s bankruptcy resolution was rooted. They find that creditors? recovery rate was 28 percent, below historical averages for firms comparable to Lehman. Losses were ...
Economic Policy Review , Issue Dec , Pages 175-206

Working Paper
The Concentration of Cleared Derivatives: Can Access to Direct CCP Clearing for End-Users Address the Challenge?

Cleared derivatives contracts are now concentrated among a small and dwindling number of institutions. Many policymakers and regulators have argued that this concentration has adverse consequences, some of which may have systemic risk implications. The authors explore the benefits and challenges of encouraging major end-users of derivatives to become direct clearing members of central counterparties (CCPs). If done prudently, increasing and diversifying the pool of clearing members and redistributing outstanding derivatives contracts across them may help CCPs become more resilient.
Working Paper Series , Paper WP-2019-6

A Resolution for 2021: No New LIBOR

Remarks at the Securities Industry and Financial Markets Association’s LIBOR Transition Forum (delivered via videoconference).


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