A working paper, published at the end of last week by the Bank of England, uses a stylised model to study how the topology of a clearing network affects the systemic risk-reduction role of central clearing – providing insights into the effects of tiering and concentration on the systemic risk-reduction role of central clearing.

In their paper, Central Counterparties and the Topology of Clearing Networks, Marco Galbiati and Kimmo Soramäki use numerical simulations to study how the function of