Central counterparty. When a swap is cleared, the CCP becomes the party facing both parties to the original swap, whose obligations (in the U.S. model) are guaranteed by their respective FCMs. In the European style principal to principal model, the Clearing Member does not guarantee the relevant counterparty obligations under the cleared swap. The DFA and regulations thereunder (in the U.S.) and EMIR in Europe, require the clearing of many swaps formerly traded OTC.

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