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Regulation

Central bankers warn again on clearing house contagion

Ten years on from Lehman's collapse, regulators still fear the default of a big bank could rock financial markets

Sunday, 5 August 2018 at 11:52

Mark Carney, governor of the Bank of England
Mark Carney, governor of the Bank of England Photo: Getty Images

The financial system is still at risk from a high degree of concentration among clearing houses, the financial plumbers at the centre of the world's banking network, according to global regulators.

Clearing houses, which are typically affiliated to stock exchanges, act as intermediaries in financial market trades, taking collateral from market participants, typically banks, and using it to guarantee transactions if either party defaults.