OFR_2016_Financial-Stability-Report

Capital Requirement
Central Clearing
Central Counterparty
(CCP)
Clearing Bank
Clearing Member
Clearing
Collateral
Commercial Mortgage-
Backed Securities
Commercial Paper
Committee on
Payments and Market
Infrastructures (CPMI)
Comprehensive Capital
Analysis and Review
(CCAR)
Concentration Risk
The amount of capital a bank must hold to act as a cushion to absorb unanticipated
losses and declines in asset values that could otherwise cause a bank to fail. U.S.
banking regulators require banks to hold more high-quality, or Tier 1, capital against
total risk-weighted assets under the Basel III international accord. Banks are classified
as well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized,
or critically undercapitalized based on regulators’ capital and leverage
calculations.
A settlement system in which securities or derivatives of a specific type are cleared by
one entity that guarantees the trades, such as a clearinghouse or central counterparty.
Central clearing is an alternative to bilateral or over-the-counter trading (see Overthe-Counter
Derivatives).
An entity that interposes itself between counterparties to contracts traded in one or
more financial markets. A CCP becomes the buyer to every seller and the seller to
every buyer to help ensure the performance of open contracts.
A commercial bank that facilitates payment and settlement of financial transactions,
such as check clearing or matching trades between the sellers and buyers of securities
and other financial instruments or contracts.
A member of, or a direct participant in, a central counterparty that is entitled to
enter into a transaction with the CCP (see Central Counterparty).
A system that facilitates the transfer of ownership of securities after they are traded.
Any asset pledged by a borrower to guarantee payment of a debt.
Securities collateralized by commercial mortgages.
Short-term (maturity of up to 270 days), unsecured corporate debt.
A standing committee of the BIS. Representatives are senior officials of member
central banks. The CPMI promotes safety and efficiency of payment, clearing, settlement,
and related activities, and it serves as a global standard setting body in this
area.
The Federal Reserve’s annual exercise to ensure that the largest U.S. bank holding
companies have robust, forward-looking capital planning processes that account for
their unique risks and sufficient capital for times of financial and economic stress.
The CCAR exercise also evaluates the banks’ individual plans to make capital distributions
such as dividend payments or stock repurchases.
Any single exposure or group of exposures with the potential to produce losses large
enough to threaten a financial institution’s ability to maintain its core operations.
94 2016 | OFR Financial Stability Report