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Central Counterparty

 

Central Counterparty, CCP

Golden Fortune Derivatives Exchange, with Central Counterparty Licence by SECC (centralcounterparty, hereinafter referred to as CCP) means that in the course of securities delivery, the original "buyer's seller" and "seller's buyer" are involved in the transaction settlement as the legal counterparty of the original market participant Party, and the entity that guarantees the execution of the transaction.

Its core is contract turnover and guarantee settlement. Due to financial derivatives, adopting margin delivery method, financial leverage is bigger, credit risk is higher. In order to reduce the credit risk of the counterparty in the delivery of financial derivatives, the central counterparty liquidation mechanism has been established internationally.

Market participants are well aware of the 'Establishment of a central counterparty'

1. Guarantee of the smooth execution of contracts

Under the CCP mechanism, the counterparty of all derivatives contracts is replaced by the service organization that provides the CCP service, and the CCP service organization guarantees the smooth execution of the contracts.


2. Effective control of the counterparty credit risk

CCP delivery services can be provided by selecting CCP service providers with improved risk management systems.