Codex · No. 1 · English Edition
Derivatives
Clearing
A Comprehensive Guide — Risk Management, Regulation,
and the Future of the Markets
A complete, practical account of derivatives clearing, built around the central counterparty and organized the way the work actually runs: from execution, through the CCP, to settlement.
When a trade is agreed, someone must stand between the two sides and make the promise good. That someone is the CCP, and the machinery it runs on — margin, default funds, auctions, and rules written in the aftermath of crises — determines whether a shock stays contained or spreads.
This book takes that layer apart. It is written from the clearing broker's seat — not the central counterparty's, not the quant's — and moves from first principles to the operational detail that practitioners actually work with: how cleared products differ, how the clearing process runs day to day, what the legal and regulatory framework requires, how risk is measured and mutualised, what onboarding and documentation demand, and where client clearing is heading.
It also sets down ground that has been hard to read about in English. The last decade: the margin spike of March 2020, the nickel and energy crises of 2022, the completion of the uncleared margin rules, and the maturing of CCP recovery and resolution. And Asia, where Japan's Financial Instruments and Exchange Act, the JSCC, and client clearing across the region are treated as first-class material rather than an appendix.
It is written for the people who have to make clearing work — clearing brokers, buy-side operations and risk teams, treasury and collateral desks, regulators, and anyone who needs the whole structure rather than a fragment of it.
Availability
Kindle and paperback — out now · USD 29.99
Published 14 September 2026.
The paperback (A5, 509 pages) is out as well, at the same price. Ask about bulk and institutional orders →
A Reader's Compass
509 pages, and not one route through them. The book opens with this table.
| Reader | Key interests | Chapters |
|---|---|---|
| Practitioners at financial institutions (Operations / IT) | Day-to-day workflows, system requirements | 1, 3, 6; related columns |
| Practitioners at financial institutions (Risk Management / Compliance) | Risk models, regulatory developments, default management | 2, 4, 5; related columns |
| Buy side (asset managers, funds) | Cost efficiency, broker selection, asset protection | 3, 6, 7; related columns |
| Students and researchers | Systematic view of the whole, historical background | 1–2 first, then onward; history-related columns |
Contents · What is in each chapter
IntroIntroduction
Sets out where clearing sits after 2008, and opens with A Reader's Compass (above). Not a book to be read straight through.
1The Fundamentals of Clearing
Why a market needs someone to stand between the two sides of a trade. Novation and the CCP as buyer to every seller; netting; the margin that makes a promise credible. CCP, clearing broker and client are separated out, with what each is actually on the hook for. Closes on market size, and on six historical columns running from the Dojima rice exchange to Lehman and the G20 — because the machinery only makes sense once you know what it was built after.
2The Basics of Cleared Products
What is actually cleared, product by product: listed futures and options, interest rate swaps, credit default swaps, and how each behaves once it enters clearing. Margin models are treated on their own terms — SPAN, VaR-based models, and the margin period of risk that sets how much cushion a product needs. Ends on the players who now populate the market, including the non-bank institutions that have moved from the edge to the centre.
3The Clearing Process in Practice
The clearing journey, in the order it happens. From execution to registration at the CCP, and the question practitioners actually ask: clearing certainty — will this trade be accepted, and what happens if it is not. Then the daily cycle: position management, netting, margin calls, collateral movements, compression. Two columns sit alongside — the 2018 Nasdaq Clearing default, and the role CCPs played as shock absorber through Lehman.
4Legal and Regulatory Framework
Why the rules look the way they do, from the 2008 crisis to the four pillars of the G20 commitment. The PFMI as the international standard and the bodies that maintain it. Then the divergence practitioners live with: the United States under the CFTC and the SEC, Europe after Brexit, and Japan's Financial Instruments and Exchange Act — with the cross-border question that follows when one trade touches three regimes.
5Risk Management in Clearing
The longest chapter, and the centre of the book. Stress testing and scenario design; the fire drills and default auctions CCPs run before they need them; JSCC's default management framework in detail. The default waterfall is taken apart layer by layer, and skin in the game is treated as the open argument it still is. Five columns cover a clearing broker's default and client asset protection, access and portability, and whether high-quality liquid assets are as safe as the rules assume — the UK LDI crisis included.
6Onboarding and Documentation
What it actually takes to bring a client into clearing: the steps in order, the information requested, credit and risk assessment, approvals, system setup. Client types are separated because they do not behave the same. Then the documents — what a clearing agreement allocates, and the segregation models that decide what a client gets back if their broker fails. Columns cover the buy side's cost-benefit decision, the LME nickel shock, and why legal opinions matter across borders.
7The Future of Client Clearing
Where the business is going, from the seat of the people who will have to run it. Cross-product margin and portfolio optimisation; the futurisation of OTC risk; direct clearing and what it does to the broker's role; automation, DLT, and what data and AI are actually changing in post-trade, as opposed to what is claimed for them.
The Columns
Twenty-six columns run alongside the technical chapters. A market's machinery only makes sense once you know what it was built after.
- ATrading and Clearing at the Eighteenth-Century Dojima Rice Exchange1
- BThe Heart of a Financial Empire: The Nineteenth-Century London Stock Exchange and the Dawn of Clearing1
- CA Pioneer of the Futures Markets: The CME and Its Trail of Clearing Innovation1
- DThe Core Infrastructure Underpinning Japan's Capital Markets: The Evolution and Challenges of JSCC1
- EDoes History Repeat Itself? Lessons from Derivatives Loss Events and the Evolution of Clearing1
- FThe Bankruptcy of Lehman Brothers and the G20 Agreement: The Path to Transforming OTC Derivatives Clearing1
- GA World of Astronomical Numbers: The Size of the Derivatives Market and Its Reality2
- HFrom "Shadow Banks" to Leading Players? The Rise of NBFI and Its Impact on Derivatives Markets2
- IThe Global Stage — The Competitive Landscape and Future of Derivatives Exchanges and CCPs2
- JThe Nasdaq Clearing Default and Its Lessons (2018)3
- KThe "Shock Absorber" in the Lehman Crisis: The Role of CCPs and the Road to OTC Reform3
- LRules That Cross Borders: Japan's Adoption of Interest Rate Swap Clearing and the Cross-Border Question4
- MWhy Choose Clearing? The Incentive Structure of OTC Clearing4
- NWhat Are the PFMI (Principles for Financial Market Infrastructures)?4
- OSupervisory Architecture in the United States: The Division of Roles Between the CFTC and the SEC4
- PThe Role of Regulators in Europe and Post-Brexit Challenges4
- QThe Default of a Clearing Broker: The Evolution of Client Asset Protection and Its Lessons5
- RHow Much of Its Own Money Should a CCP Put at Risk? The Philosophy and Reality of Skin in the Game5
- SCan a CCP Fail?5
- TThe Door to Clearing: The International Debate over Access and Portability5
- UAre Safe Assets Really Safe? HQLA Regulation, Procyclicality, and the Lessons of the UK LDI Crisis5
- VWeighing the Costs and Benefits of Clearing: Decision-Making on the Buy Side6
- WThe LME Nickel Shock — A Crisis Born of Illiquidity and Concentration Risk, and a Warning for Clearing6
- XDo Contracts Cross Borders? OTC Derivatives and the Importance of Legal Opinions6
- YHow Data and AI Are Transforming the Future of Financial Platforms7
- ZStructural Shifts and the Deepening Convergence of Cash and Derivatives Clearing7
In the Academic Record
Two chapters of the book are also deposited on SSRN as working papers — citable, and free to download. The Introduction and Chapter 1 run to 111 pages, last revised 23 August 2026. Chapter 7, The Future of Client Clearing, runs to 75 pages, posted 10 August 2026: cross-product margining, the futurisation of OTC risk, direct clearing after FTX, distributed ledger technology, and what the clearing broker's role becomes once each of them is taken seriously.
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