This morning I came across the paper "A Bill of Goods: CCPs and Systemic Risk" by Dr Craig Pirrong, provided through his blog "Streetwise Professor". Last September I had the chance to speak at the 13th Annual Collateral Management conference by Marcus Evans on the exact same topic and broadly speaking, the conclusions are pretty much the same, the risk will not be eliminated, it will just be redirected. As Professor says "It's unknown and unknowable whether the risks will be redistributed in ways that reduce, increase, or leave unchanged systemic risk, or increase it in some scenarios and reduce it in others. Our ignorance of the systemic effects of this risk redistribution is compounded by the fact that the system will not stand still". Despite the fact that the wider use of central counterparties (CCPs) for over-the-counter derivatives is expected to improve market resilience by lowering counterparty risk and increasing transparency, given the incredible complexity of the financial system and the fact that there is a rich set of interactions between clearinghouses and the broader financial system, it's quite possible that this expectation may not come true exactly as such. Until the OTC market finds its new equilibrium, it's all in theory….. Maria L.