Modus operandi of central counterparty clearing Sample Clauses

Modus operandi of central counterparty clearing. In its simplest form, a CCP interposes itself between the contracting parties to a collateral transaction.148 This means that no direct contract exists between the original contracting parties (as in a bilateral transaction149) but rather, two separate contracts exist with the CCP and each counterparty (clearing mem- ber150). The CCP is therefore the primary counterparty on both sides of the contract – “the buyer to every seller and the seller to every buyer”.151 As a result, The CCP legally assumes all contractual rights, obligations and risks arising from the contract. The legal process whereby the CCP is positioned between the buyer and the seller is known as ‘novation’, which is the replace-
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