Question

What role does a Central Counterparty (CCP) perform in

Q: Answer-What role does a Central Counterparty (CCP) perform in financial transaction markets?

A Central Counterparty CCP is an essential market infrastructure entity that mitigates bilateral counterparty risk by interposing itself between transacting sides, becoming the buyer to every seller and the seller to every buyer.

financial transaction markets?

A It acts as an auditing division that liquidates bad corporate debts

B It acts as a financial clearing intermediary, stepping between buyers and sellers to guarantee trade settlement performance

C It serves as an independent credit bureau approving infrastructure project tranches

D It acts as a primary credit rating agency for financial market participants

E It registers partnership agreements and corporate bylaws for commercial firms

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What role does a Central Counterparty (CCP) perform in

Solution