The Federal Reserve Bank of Chicago's Financial Markets Group is a multidisciplinary initiative to study financial markets and the clearing and settlement operations that support these markets, with particular focus on Chicago derivatives exchanges and clearinghouses.
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Financial market utilities ensure that clearing, settlement, and payments operations go smoothly. In this edition of the Chicago Fed Letter, Richard Heckinger, David Marshall, and Robert Steigerwald explore how these systems mitigate settlement risk, using precisely targeted "just-in-time" liquidity, and discuss the risks for financial stability implied by the increasing role of just-in-time liquidity in our financial markets.
Derivatives are a class of financial instruments that derive their value from some underlying commodity, security, index, or other asset. Futures and options are common forms of derivatives. John McPartland explains in this edition of the Chicago Fed Letter how clearing and settlement systems for exchange traded derivatives work.
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