medium · FRM Part 1 Financial Markets and Products
If a clearinghouse uses its own 'skin in the game' to cover a default, where does this typically sit in the default waterfall sequence?
- After the defaulting member's contributions but before other members' mutualized funds
- Before the defaulting member's own posted initial margin has been applied
- At the very end of the entire waterfall, only after all member funds are exhausted
- It is never used at all, since CCPs are inherently guaranteed by their home government's treasury
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