5. Approach to Risk Management
5.4 Investment Risks
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Clearing houses face credit, liquidity and custody risks through investing their financial resources. They may also face these same types of risk from investing or safekeeping margin assets for their clearing members.53 To limit their credit and liquidity risks, clearing houses usually establish standards for the creditworthiness of obligors and limit investments to relatively liquid or short-term instruments. Clearing houses seek to limit custody risks by carefully selecting the custodians whose services are used and by monitoring their performance closely. Diversification is also utilised to reduce risks bank deposits are often spread among multiple banks and multiple custodians may be employed. Footnote: 53 These risks may be borne by the clearing house or by the clearing members and their clients directly.
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5. Approach to Risk Management
