Clearing Firms Simulate Lehman-Like Default During Brexit Chaos
- Regulators asked to test clearinghouses during market shock
- Each clearing firm successfully completed hedging and auctions
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The first coordinated global test showed clearinghouses, the firewalls protecting the financial system from calamity, are strong enough to survive a major bank going bust.
Regulators wanted to know what would’ve happened if there’d been a Lehman Brothers Holdings Inc.-style collapse during a market shock like that of the Brexit vote last year. So they asked three major clearinghouses -- LCH, CME Clearing and Eurex Clearing -- to run a simulation.