Canadian research finds net liquidity boost from central clearing

bankofcanada

A working paper, published by the Bank of Canada on December 6, finds a move to central clearing should produce a small increase in liquidity.

The researchers, Joshua Slive, Jonathan Witmer and Elizabeth Woodman, analyse a dataset of centrally cleared trades of credit derivatives since 2008, the majority from inter-dealer trades. They find that while a move to central clearing may reduce liquidity by imposing stricter collateral requirements, this is offset by a fall in counterparty risk and

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