medium · FRM Part 2 Credit Risk
A CCP's default waterfall is designed to ensure 'incentive alignment'.
Which resource is typically the *first* to be used after a defaulting member’s own margin and default fund contribution are exhausted?
- The initial margin of all other members.
- The default fund contributions of non-defaulting members.
- The equity of the CCP’s parent company.
- The CCP's own 'skin-in-the-game' (SITG) capital.
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