Settlement risk under gross and net settlement
By: Charles M. Kahn, James McAndrews, and William Roberds.
Contributors: Roberds, William.; McAndrews, James J.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 86; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 86.
Publisher: Federal Reserve Bank of New York
Published: 1999
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Clearinghouses (Banking)
Description: "Previous comparative analyses of gross and net settlement have focused on the credit risk of the central counterparty in net settlement arrangements, and on the incentives for participants to alter the risk of the portfolio under net settlement.  By modeling the trading economy that generates the demand for payment services, we are able to show some largely unexplored advantages of net settlement.  We find that net settlement systems avoid certain gridlock situations, which may arise in gross settlement in the absence of delivery versus payment requirements.  In addition, net settlement can economize on collateral requirements and avoid trading delays"--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.