# How Does a Default Management Committee Differ from a CCP's Internal Risk Management Team? ▴ Question

**Published:** 2025-08-02
**Categories:** Question

---

![An intricate system visualizes an institutional-grade Crypto Derivatives OS. Its central high-fidelity execution engine, with visible market microstructure and FIX protocol wiring, enables robust RFQ protocols for digital asset derivatives, optimizing capital efficiency via liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-price-discovery.jpg)

![Intricate core of a Crypto Derivatives OS, showcasing precision platters symbolizing diverse liquidity pools and a high-fidelity execution arm. This depicts robust principal's operational framework for institutional digital asset derivatives, optimizing RFQ protocol processing and market microstructure for best execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-execution-system.jpg)

## Concept

An inquiry into the distinction between a central counterparty’s (CCP) [Default Management Committee](https://prime.greeks.live/area/default-management-committee/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (DMC) and its [internal risk management](https://prime.greeks.live/area/internal-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) team moves directly to the core of financial stability architecture. The question presupposes a separation of duties that is, in itself, the primary mechanism for ensuring a clearinghouse’s resilience. One does not simply replace the other; they operate in different temporal states and with fundamentally different compositions and mandates.

The internal risk [management team](https://prime.greeks.live/area/management-team/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the CCP’s permanent, standing defense system, engineered for the continuous, day-to-day management of quantifiable exposures. The Default [Management Committee](https://prime.greeks.live/question/what-is-the-role-of-a-default-management-committee-in-a-ccp-crisis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a specialized crisis-response protocol, a council of war convened only when those defenses have been breached by a member’s failure.

The internal [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) team functions as the CCP’s immune system. Its work is perpetual, prophylactic, and rooted in quantitative modeling. This team is composed of full-time employees of the CCP ▴ quants, risk analysts, and systems engineers. Their entire operational purpose is to prevent a default from occurring and to ensure that if one does, the CCP’s pre-funded financial resources are sufficient to absorb the blow without contagion.

They are the architects of the “[defaulter pays](https://prime.greeks.live/area/defaulter-pays/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” model, designing and calibrating the [initial margin](https://prime.greeks.live/area/initial-margin/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) models, stress tests, and liquidity resource requirements that form the bedrock of the CCP’s risk framework. Their perspective is systemic and forward-looking, but their actions are executed within the controlled environment of the CCP’s own rules and systems.

> A CCP’s internal risk team builds the fortress walls daily, while the Default Management Committee is summoned to command the fortress defense when a wall is breached.

Conversely, the [Default Management](https://prime.greeks.live/area/default-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Committee is an entity designed for a singular, acute purpose ▴ the orderly resolution of a declared default. Its activation is a trigger-based event, not a continuous process. Critically, its composition reflects a fusion of internal authority and external market expertise. While senior CCP officials are present, the committee’s power and effectiveness are derived from the inclusion of representatives from non-defaulting clearing members.

This structure is a deliberate design choice. The internal team possesses the definitive data on the defaulter’s portfolio, but the external members bring real-time market intelligence, trading expertise, and the crucial perspective of those who will be bidding on the liquidated portfolio and who stand to lose if the process is mismanaged. The DMC’s mandate is not preventative but curative; it is tasked with the surgical excision of the [defaulted portfolio](https://prime.greeks.live/question/what-are-the-primary-challenges-in-valuing-a-defaulted-counterpartys-derivatives-portfolio/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from the clearinghouse with minimal damage to the ecosystem.

![The image depicts two interconnected modular systems, one ivory and one teal, symbolizing robust institutional grade infrastructure for digital asset derivatives. Glowing internal components represent algorithmic trading engines and intelligence layers facilitating RFQ protocols for high-fidelity execution and atomic settlement of multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-1.jpg)

## What Is the Core Jurisdictional Boundary between the Two Entities?

The jurisdictional boundary is defined by the state of the system. The internal risk management team’s jurisdiction is the “peacetime” operation of the CCP. They govern the rules of engagement, set the required level of defenses (margin, [default fund](https://prime.greeks.live/area/default-fund/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) contributions), and monitor the entire battlefield of cleared transactions for signs of weakness or concentration.

Their authority is derived from the CCP’s rulebook and is exercised through automated calculations and periodic reviews. They recommend changes to margin models, advise the board on risk tolerance, and ensure the CCP operates within the stringent guidelines set by regulators like [CPMI-IOSCO](https://prime.greeks.live/area/cpmi-iosco/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

The Default Management Committee’s jurisdiction begins at the moment a [clearing member](https://prime.greeks.live/area/clearing-member/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is formally declared in default. This declaration acts as a constitutional trigger, shifting authority for the defaulted portfolio from the routine, automated processes of the internal risk team to the discretionary, expert-driven decisions of the committee. The DMC’s power is immense but narrowly focused.

It is empowered to take control of a member’s assets, execute hedges in the open market, design and conduct an auction of complex positions, and ultimately, allocate losses according to the CCP’s [default waterfall](https://prime.greeks.live/area/default-waterfall/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Its decisions are binding and are made under extreme time pressure, blending the CCP’s internal data with the external members’ market acumen to achieve the best possible outcome for the entire clearing system.

![A sleek, open system showcases modular architecture, embodying an institutional-grade Prime RFQ for digital asset derivatives. Distinct internal components signify liquidity pools and multi-leg spread capabilities, ensuring high-fidelity execution via RFQ protocols for price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-modularity-unveiled.jpg)

![A reflective sphere, bisected by a sharp metallic ring, encapsulates a dynamic cosmic pattern. This abstract representation symbolizes a Prime RFQ liquidity pool for institutional digital asset derivatives, enabling RFQ protocol price discovery and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-1.jpg)

## Strategy

The strategic objectives of the internal risk team and the Default Management Committee are sequential and symbiotic. The former’s strategy is one of systemic fortification and prevention, while the latter’s is one of rapid, decisive crisis intervention. Understanding this strategic handoff is key to appreciating the robustness of the central clearing model.

![A deconstructed mechanical system with segmented components, revealing intricate gears and polished shafts, symbolizing the transparent, modular architecture of an institutional digital asset derivatives trading platform. This illustrates multi-leg spread execution, RFQ protocols, and atomic settlement processes](https://options.greeks.live/wp-content/uploads/2025/07/deconstructed-principal-trading-system-revealing-core-mechanics-of-digital-asset-derivatives-execution.jpg)

## The Prophylactic Strategy of the Internal Risk Management Team

The internal risk team’s strategy is built on a foundation of preventing [loss mutualization](https://prime.greeks.live/area/loss-mutualization/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Its primary goal is to ensure the “defaulter pays” principle holds true by maintaining a multi-layered defense system that can withstand extreme but plausible market conditions. This strategy is executed through several core pillars:

- 
**Margin Model Supremacy** The team’s central strategic objective is the development and constant refinement of initial margin models. These models must be sensitive enough to react to changing market volatility and specific product risks but robust enough not to create undue procyclicality. The strategy involves rigorous back-testing and simulation to ensure margin levels are sufficient to cover potential losses over a specified close-out period.

- 
**[Stress Testing](https://prime.greeks.live/area/stress-testing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) as a Forward-Looking Tool** Beyond daily margining, the team employs a strategy of severe stress testing. This involves simulating historical crises (e.g. 2008 financial crisis, sovereign defaults) and creating hypothetical but plausible future scenarios to test the adequacy of the entire default waterfall, including the CCP’s own capital contribution (“skin-in-the-game”). These tests inform the required size of the default fund and liquidity resources.

- 
**Liquidity Risk Fortification** The team must ensure the CCP can meet all its payment obligations even during a major member default. This strategy involves not just assessing the adequacy of cash and collateral held but also maintaining committed credit lines and other liquidity arrangements, ensuring they are available at a moment’s notice.

- 
**Concentration Monitoring** A key preventative strategy is the continuous monitoring of large positions held by any single member or across correlated members. The internal risk team establishes concentration limits and may apply additional margin requirements to mitigate the risk that a single large portfolio could overwhelm the CCP’s resources.

![An opaque principal's operational framework half-sphere interfaces a translucent digital asset derivatives sphere, revealing implied volatility. This symbolizes high-fidelity execution via an RFQ protocol, enabling private quotation within the market microstructure and deep liquidity pool for a robust Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-13.jpg)

## Core Strategic Functions of Internal Risk Management

| Strategic Function | Objective | Primary Tools | Frequency |
| --- | --- | --- | --- |
| Initial Margin Modeling | Ensure sufficient collateral is held to cover potential future exposure from each member. | VaR, SPAN, Filtered Historical Simulation | Continuous Calculation, Periodic Model Review |
| Default Fund Sizing | Guarantee adequate mutualized resources to cover losses exceeding a defaulter’s margin. | Stress Testing, Cover-1/Cover-2 Standard | Quarterly/Semi-Annually |
| Liquidity Risk Management | Maintain sufficient liquid resources to meet settlement obligations in a crisis. | Liquidity Stress Tests, Committed Credit Lines | Daily Monitoring, Periodic Testing |
| Model Validation & Back-testing | Validate the accuracy and performance of risk models against historical data. | Statistical Back-testing, Procyclicality Analysis | Daily, Monthly, and Annually |

![A symmetrical, angular mechanism with illuminated internal components against a dark background, abstractly representing a high-fidelity execution engine for institutional digital asset derivatives. This visualizes the market microstructure and algorithmic trading precision essential for RFQ protocols, multi-leg spread strategies, and atomic settlement within a Principal OS framework, ensuring capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/precision-execution-engine-for-institutional-digital-asset-derivatives-rfq.jpg)

## The Surgical Strategy of the Default Management Committee

When a default occurs, the strategic imperative shifts from prevention to containment and resolution. The DMC’s strategy is not about long-term modeling but about immediate, decisive action to neutralize risk and restore market confidence. Its strategy unfolds in a clear, pre-defined sequence, as outlined in the CCP’s rulebook and tested during regular “fire drills.”

> The DMC operates on a timeline of hours and days, not quarters and years, making decisions that have immediate and irreversible market impact.

The core strategy of the DMC is to liquidate the defaulter’s portfolio at the best possible price, using the expertise of its members to navigate volatile market conditions. This involves three strategic phases:

- 
**Information and Neutralization** The first step is to gain a complete, accurate picture of the defaulted portfolio from the internal risk team. Simultaneously, the DMC must decide on and execute a hedging strategy. This may involve using liquid futures or other instruments to offset the primary market risk of the portfolio, thereby stabilizing its value before it can be auctioned. This is a critical step to prevent further losses as the market reacts to news of the default.

- 
**Portfolio Segmentation and Valuation** A large, complex portfolio cannot be sold in a single block. A key strategic decision for the DMC is how to break the portfolio into smaller, more digestible sub-portfolios or tranches. This makes it easier for a wider range of market participants to bid, increasing competition and improving the potential sale price. The committee uses the expertise of its trading members to create tranches that are logical and appealing to potential bidders.

- 
**Auction and Resolution** The ultimate strategic act is the [default auction](https://prime.greeks.live/area/default-auction/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) itself. The DMC designs the auction process, sets the rules, and communicates with potential bidders. The goal is to maximize proceeds to cover the CCP’s exposure. If the auction proceeds and the defaulter’s margin are insufficient, the DMC oversees the application of the remaining layers of the default waterfall, including the CCP’s skin-in-the-game and the mutualized default fund.

![Segmented beige and blue spheres, connected by a central shaft, expose intricate internal mechanisms. This represents institutional RFQ protocol dynamics, emphasizing price discovery, high-fidelity execution, and capital efficiency within digital asset derivatives market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimal-execution.jpg)

![Abstract depiction of an advanced institutional trading system, featuring a prominent sensor for real-time price discovery and an intelligence layer. Visible circuitry signifies algorithmic trading capabilities, low-latency execution, and robust FIX protocol integration for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-protocols.jpg)

## Execution

The execution phase reveals the most profound differences between the two entities. The internal risk team’s execution is a highly automated, continuous, and data-driven process. The Default Management Committee’s execution is a manual, intensive, and judgment-based procedure that unfolds under immense pressure. It represents the transition from algorithmic risk management to human-led crisis management.

![Internal hard drive mechanics, with a read/write head poised over a data platter, symbolize the precise, low-latency execution and high-fidelity data access vital for institutional digital asset derivatives. This embodies a Principal OS architecture supporting robust RFQ protocols, enabling atomic settlement and optimized liquidity aggregation within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-precision-execution-system-microstructure.jpg)

## Execution Framework of the Internal Risk Management Team

The daily execution of the internal risk team is the engine that powers the CCP’s stability. It is a relentless cycle of data ingestion, calculation, and reporting. Their work is what provides the raw material ▴ the verified data and financial resources ▴ that the DMC would need in a crisis. The process is designed for precision and repeatability.

![A polished, segmented metallic disk with internal structural elements and reflective surfaces. This visualizes a sophisticated RFQ protocol engine, representing the market microstructure of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-1.jpg)

## A Typical Operational Cycle for a CCP Risk Team

- 
**End-of-Day Processing** After the market closes, the team’s systems collect final position data from all clearing members. The core margin calculation process begins, applying the CCP’s approved models (like SPAN or a VaR-based system) to every single account to determine the required initial margin for the next trading day.

- 
**Margin Calls and Collateral Management** The system automatically issues margin calls to members whose collateral on deposit has fallen below the newly calculated requirement. The team oversees this process, monitoring the settlement of margin calls and managing the vast pool of collateral (cash and non-cash) held by the CCP. This includes daily valuation of non-cash collateral.

- 
**Liquidity and Exposure Monitoring** Throughout the day, the team monitors the CCP’s liquidity position in real-time. They track payment flows and ensure that the CCP has sufficient funds at its disposal at various settlement banks. They also run intraday risk calculations to monitor for any dramatic shifts in member exposures during the trading session.

- 
**Reporting and Escalation** The team generates a suite of daily risk reports for senior management and the CCP’s board. These reports summarize key metrics like total initial margin held, default fund size, results of back-testing, and any breaches of risk limits. A clear escalation procedure is in place to notify senior management immediately if a member fails to meet a margin call or if a critical risk threshold is crossed.

![Internal mechanism with translucent green guide, dark components. Represents Market Microstructure of Institutional Grade Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-crypto-derivatives-rfq-engine-for-high-fidelity-execution.jpg)

## How Does a Default Management Committee Execute Its Mandate?

The execution of a default management plan is a high-stakes, manual process that follows a clear, auditable playbook. While the plan is pre-defined, its execution requires significant judgment from the DMC members. The following steps represent a common operational flow for a default.

![Abstract depiction of an institutional digital asset derivatives execution system. A central market microstructure wheel supports a Prime RFQ framework, revealing an algorithmic trading engine for high-fidelity execution of multi-leg spreads and block trades via advanced RFQ protocols, optimizing capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-execution-system-1.jpg)

## The Default Management Playbook an Operational Breakdown

- 
**Step 1 Declaration and Isolation** The CCP’s senior management, upon confirmation that a member cannot meet its obligations, formally declares a default. The first executive action is to isolate the defaulter’s positions in the clearing system, preventing any further trading activity. The DMC is officially convened.

- 
**Step 2 Information Assembly and Initial Hedging** The internal risk team provides the DMC with a complete and final data file of the defaulter’s entire portfolio. The DMC, blending the CCP’s data with the members’ market knowledge, makes its first critical decision ▴ whether to hedge the portfolio’s market risk immediately. If so, traders from the CCP or designated member firms execute these hedges on the open market under the DMC’s direction.

- 
**Step 3 Portfolio Valuation and Auction Design** The DMC analyzes the portfolio, which could contain thousands of derivatives contracts across multiple asset classes. Using their collective expertise, they decide how to partition the portfolio into auction tranches. The goal is to create packages that are large enough to be meaningful but not so large or complex that they deter bidders.

- 
**Step 4 Communication with Bidders** The CCP, guided by the DMC, communicates with all other non-defaulting clearing members (and potentially other approved bidders). They provide carefully controlled information about the contents of the auction tranches, giving potential bidders enough data to price the positions without revealing sensitive information that could move the market.

- 
**Step 5 The Auction** The DMC oversees the auction itself. Bids are submitted electronically through a secure system. The committee analyzes the bids for each tranche, selecting the ones that best serve the objective of minimizing loss to the clearinghouse. This may not always be the highest price if a bid comes with complicated conditions.

- 
**Step 6 Allocation and Loss Calculation** The winning bidders have the positions transferred to their accounts. The CCP’s operations team then calculates the final financial result. The proceeds from the auction, combined with the defaulter’s initial margin and default fund contribution, are tallied against the CCP’s total exposure.

- 
**Step 7 Waterfall Application** If the proceeds are insufficient to cover the loss, the DMC oversees the application of the default waterfall as defined in the CCP’s rules. This involves, in a typical order ▴ applying the rest of the defaulter’s assets, the CCP’s “skin-in-the-game” capital, and then pro-rata contributions from the non-defaulting members’ default fund deposits.

![A dual-toned cylindrical component features a central transparent aperture revealing intricate metallic wiring. This signifies a core RFQ processing unit for Digital Asset Derivatives, enabling rapid Price Discovery and High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-best-execution-prime-os.jpg)

## Comparative Authority and Composition

| Attribute | Internal Risk Management Team | Default Management Committee (DMC) |
| --- | --- | --- |
| Composition | Full-time CCP employees (quantitative analysts, risk managers, IT specialists). | Senior CCP executives plus designated senior representatives from non-defaulting clearing member firms. |
| Primary Mandate | Ongoing risk prevention, measurement, and mitigation. Systemic fortification. | Crisis resolution. Orderly liquidation of a defaulted portfolio and allocation of losses. |
| Activation Trigger | Continuous operation; part of daily business-as-usual. | Formal declaration of a clearing member default. |
| Core Tools | Algorithmic models (VaR, SPAN), stress testing software, automated reporting systems. | Expert judgment, market intelligence, secure auction platforms, direct communication. |
| Decision Making | Rule-based, data-driven, and highly automated according to the CCP rulebook. | Discretionary, judgment-based, and collaborative, executed under severe time constraints. |

![A futuristic system component with a split design and intricate central element, embodying advanced RFQ protocols. This visualizes high-fidelity execution, precise price discovery, and granular market microstructure control for institutional digital asset derivatives, optimizing liquidity provision and minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/07/advanced-rfq-protocols-for-digital-asset-derivatives-price-discovery.jpg)

## References

- Bank for International Settlements. “Central counterparty default management auctions – Issues for consideration.” CPMI, December 2015.

- Bank for International Settlements. “A discussion paper on central counterparty default management auctions.” CPMI, July 2014.

- CCP12. “CCP Best Practices ▴ A CCP12 Position Paper.” The Global Association of Central Counterparties, 2019.

- FIA.org. “Central Clearing ▴ Recommendations for CCP Risk Management.” Futures Industry Association, March 2019.

- FIA.org. “FIA Global CCP Risk Position Paper.” Futures Industry Association, April 2015.

![A detailed cutaway of a spherical institutional trading system reveals an internal disk, symbolizing a deep liquidity pool. A high-fidelity probe interacts for atomic settlement, reflecting precise RFQ protocol execution within complex market microstructure for digital asset derivatives and Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-microstructure-revealed.jpg)

## Reflection

The architecture separating the continuous, analytical function of an internal risk team from the acute, decisive function of a Default Management Committee is a masterclass in systemic design. It acknowledges that no model, however sophisticated, can perfectly anticipate every potential failure. It builds a framework that anticipates its own potential breach and plans for an orderly transition from automated defense to human-led, expert-driven crisis command. The existence of the DMC is an admission that in moments of ultimate crisis, quantitative precision must be augmented by the qualitative judgment and market experience of those with capital at risk.

For any market participant, understanding this dual structure is not merely an academic exercise. It is a fundamental insight into the resilience of the markets they depend on. The integrity of the system rests not on a single wall, but on a layered defense where the sentries of the internal risk team are backed by a council of seasoned commanders ready to be convened at a moment’s notice.

![Clear sphere, precise metallic probe, reflective platform, blue internal light. This symbolizes RFQ protocol for high-fidelity execution of digital asset derivatives, optimizing price discovery within market microstructure, leveraging dark liquidity for atomic settlement and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-precision-execution-1.jpg)

## Glossary

<a href="https://prime.greeks.live/area/default-management-committee/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered institutional digital asset derivatives execution system cutaway. The teal Prime RFQ casing reveals intricate market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-protocol-core-engine.jpg)

## Default Management Committee

Meaning ▴ The Default Management Committee constitutes a specialized governance body, typically situated within a central counterparty clearing house or a regulated digital asset derivatives exchange, charged with the critical responsibility of managing and resolving member defaults to maintain market integrity. </a><a href="https://prime.greeks.live/area/internal-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Modular institutional-grade execution system components reveal luminous green data pathways, symbolizing high-fidelity cross-asset connectivity. This depicts intricate market microstructure facilitating RFQ protocol integration for atomic settlement of digital asset derivatives within a Principal's operational framework, underpinned by a Prime RFQ intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/modular-high-fidelity-execution-architecture-for-institutional-digital-asset-derivatives-rfq-protocol-integration-and-principals-operational-framework-optimization.jpg)

## Internal Risk Management

Meaning ▴ Internal Risk Management refers to the systematic framework and processes an institution deploys to identify, measure, monitor, and mitigate financial and operational exposures across its proprietary and client-facing activities, particularly within the volatile domain of digital asset derivatives. </a><a href="https://prime.greeks.live/question/what-is-the-role-of-a-default-management-committee-in-a-ccp-crisis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Internal components of a Prime RFQ execution engine, with modular beige units, precise metallic mechanisms, and complex data wiring. This infrastructure supports high-fidelity execution for institutional digital asset derivatives, facilitating advanced RFQ protocols, optimal liquidity aggregation, multi-leg spread trading, and efficient price discovery](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-core-rfq-engine-for-institutional-digital-asset-options.jpg)

## Management Committee

A Default Management Committee provides strategic counsel and specialized expertise to a CCP during a member's default, ensuring the orderly liquidation of assets and the preservation of market stability. </a><a href="https://prime.greeks.live/area/management-team/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek pen hovers over a luminous circular structure with teal internal components, symbolizing precise RFQ initiation. This represents high-fidelity execution for institutional digital asset derivatives, optimizing market microstructure and achieving atomic settlement within a Prime RFQ liquidity pool](https://options.greeks.live/wp-content/uploads/2025/07/optimizing-digital-asset-derivatives-rfq-through-prime-os-precision.jpg)

## Management Team

Meaning ▴ A Management Team constitutes the core strategic and operational control unit of an institutional entity, comprising senior leadership personnel responsible for defining organizational objectives, allocating critical resources, and overseeing the execution of enterprise-level directives within a defined risk framework. </a><a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract metallic and dark components symbolize complex market microstructure and fragmented liquidity pools for digital asset derivatives. A smooth disc represents high-fidelity execution and price discovery facilitated by advanced RFQ protocols on a robust Prime RFQ, enabling precise atomic settlement for institutional multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-market-microstructure-optimizing-rfq-protocols-for-high-fidelity-execution-on-prime-os.jpg)

## Risk Management

Meaning ▴ Risk Management is the systematic process of identifying, assessing, and mitigating potential financial exposures and operational vulnerabilities within an institutional trading framework. </a><a href="https://prime.greeks.live/area/initial-margin/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Symmetrical internal components, light green and white, converge at central blue nodes. This abstract representation embodies a Principal's operational framework, enabling high-fidelity execution of institutional digital asset derivatives via advanced RFQ protocols, optimizing market microstructure for price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-core.jpg)

## Initial Margin

Meaning ▴ Initial Margin is the collateral required by a clearing house or broker from a counterparty to open and maintain a derivatives position. </a><a href="https://prime.greeks.live/area/defaulter-pays/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A smooth, light-beige spherical module features a prominent black circular aperture with a vibrant blue internal glow. This represents a dedicated institutional grade sensor or intelligence layer for high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligence-layer-for-optimal-digital-asset-rfq-execution.jpg)

## Defaulter Pays

Meaning ▴ The Defaulter Pays principle mandates that the defaulting participant within a clearing system bears the initial financial burden of their default, utilizing their own posted collateral before the mutualized default fund or other clearing member contributions are triggered. </a><a href="https://prime.greeks.live/area/default-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An exposed institutional digital asset derivatives engine reveals its market microstructure. The polished disc represents a liquidity pool for price discovery](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-execution-system.jpg)

## Default Management

Meaning ▴ Default Management refers to the systematic processes and mechanisms implemented by central counterparties (CCPs) or prime brokers to mitigate and resolve situations where a clearing member or counterparty fails to meet its financial obligations, typically involving margin calls or settlement payments, thereby ensuring market stability and integrity within the digital asset derivatives ecosystem. </a><a href="https://prime.greeks.live/question/what-are-the-primary-challenges-in-valuing-a-defaulted-counterpartys-derivatives-portfolio/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek Prime RFQ component extends towards a luminous teal sphere, symbolizing Liquidity Aggregation and Price Discovery for Institutional Digital Asset Derivatives. This represents High-Fidelity Execution via RFQ Protocol within a Principal's Operational Framework, optimizing Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-execution-for-institutional-digital-asset-derivatives.jpg)

## Defaulted Portfolio

Valuing a defaulted derivatives portfolio is a complex process of asserting a defensible claim in a dislocated market under severe legal and operational duress. </a><a href="https://prime.greeks.live/area/default-fund/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated institutional-grade system's internal mechanics. A central metallic wheel, symbolizing an algorithmic trading engine, sits above glossy surfaces with luminous data pathways and execution triggers](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-core.jpg)

## Default Fund

Meaning ▴ The Default Fund represents a pre-funded pool of capital contributed by clearing members of a Central Counterparty (CCP) or exchange, specifically designed to absorb financial losses incurred from a defaulting participant that exceed their posted collateral and the CCP's own capital contributions. </a><a href="https://prime.greeks.live/area/cpmi-iosco/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered modular components, with teal accents, align at a central interface. This visually embodies an RFQ protocol for institutional digital asset derivatives, facilitating principal liquidity aggregation and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-rfq-execution-interface-for-atomic-settlement.jpg)

## Cpmi-Iosco

Meaning ▴ CPMI-IOSCO refers to the joint work products, primarily the Principles for Financial Market Infrastructures (PFMI), developed by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions. </a><a href="https://prime.greeks.live/area/clearing-member/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Internal, precise metallic and transparent components are illuminated by a teal glow. This visual metaphor represents the sophisticated market microstructure and high-fidelity execution of RFQ protocols for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-microstructure-prime-os-intelligence-layer-atomic-settlement-precision.jpg)

## Clearing Member

Meaning ▴ A Clearing Member is a financial institution, typically a bank or broker-dealer, authorized by a Central Counterparty (CCP) to clear trades on behalf of itself and its clients. </a><a href="https://prime.greeks.live/area/default-waterfall/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated, multi-component system propels a sleek, teal-colored digital asset derivative trade. The complex internal structure represents a proprietary RFQ protocol engine with liquidity aggregation and price discovery mechanisms](https://options.greeks.live/wp-content/uploads/2025/07/principals-high-fidelity-rfq-engine-for-digital-asset-derivatives-execution.jpg)

## Default Waterfall

Meaning ▴ In institutional finance, particularly within clearing houses or centralized counterparties (CCPs) for derivatives, a Default Waterfall defines the pre-determined sequence of financial resources that will be utilized to absorb losses incurred by a defaulting participant. </a><a href="https://prime.greeks.live/area/loss-mutualization/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, futuristic institutional grade platform with a translucent teal dome signifies a secure environment for private quotation and high-fidelity execution. A dark, reflective sphere represents an intelligence layer for algorithmic trading and price discovery within market microstructure, ensuring capital efficiency for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-execution-for-institutional-digital-asset-derivatives-1.jpg)

## Loss Mutualization

Meaning ▴ Loss mutualization is a mechanism where financial losses from participant default within a centralized system are collectively absorbed by remaining members. </a><a href="https://prime.greeks.live/area/stress-testing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision internal mechanism for 'Institutional Digital Asset Derivatives' 'Prime RFQ'. White casing holds dark blue 'algorithmic trading' logic and a teal 'multi-leg spread' module](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-high-fidelity-execution-liquidity-aggregation.jpg)

## Stress Testing

Meaning ▴ Stress testing is a computational methodology engineered to evaluate the resilience and stability of financial systems, portfolios, or institutions when subjected to severe, yet plausible, adverse market conditions or operational disruptions. </a><a href="https://prime.greeks.live/area/default-auction/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An exposed high-fidelity execution engine reveals the complex market microstructure of an institutional-grade crypto derivatives OS. Precision components facilitate smart order routing and multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-microstructure-2.jpg)

## Default Auction

Meaning ▴ A Default Auction represents a structured, automated mechanism for the orderly liquidation of collateral held against a defaulting participant's open positions within a clearing house or prime brokerage framework. </a>

**Tags:** [Default Waterfall](https://options.greeks.live/area/default-waterfall/), [Default Management](https://options.greeks.live/area/default-management/), [Loss Mutualization](https://options.greeks.live/area/loss-mutualization/), [Internal Risk Management](https://options.greeks.live/area/internal-risk-management/), [Default Auction](https://options.greeks.live/area/default-auction/), [Central Counterparty](https://options.greeks.live/area/central-counterparty/)	

## Discover More

- 
### [What Are the Layers of the Default Waterfall and How Do They Protect the Financial System?](https://options.greeks.live/question/what-are-the-layers-of-the-default-waterfall-and-how-do-they-protect-the-financial-system/)
![Smooth, glossy, multi-colored discs stack irregularly, topped by a dome. This embodies institutional digital asset derivatives market microstructure, with RFQ protocols facilitating aggregated inquiry for multi-leg spread execution. It signifies high-fidelity execution, price discovery across diverse liquidity pools, driven by Prime RFQ for best execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-for-prime-os-best-execution.jpg)

The default waterfall is a pre-defined, sequential liability protocol that neutralizes counterparty failure by absorbing losses through a tiered capital structure.

- 
### [What Is the Precise Sequence of the Default Waterfall in a Clearing Member Failure?](https://options.greeks.live/question/what-is-the-precise-sequence-of-the-default-waterfall-in-a-clearing-member-failure/)
![A sophisticated, layered circular interface with intersecting pointers symbolizes institutional digital asset derivatives trading. It represents the intricate market microstructure, real-time price discovery via RFQ protocols, and high-fidelity execution. The design evokes quantitative analysis, smart order routing, and the intelligence layer of a Prime RFQ for capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-market-microstructure.jpg)

The default waterfall is a sequential, multi-layered financial defense system activated to absorb a clearing member's losses.

- 
### [What Are the Legal Obligations for a Surviving Member during a Default Auction Process?](https://options.greeks.live/question/what-are-the-legal-obligations-for-a-surviving-member-during-a-default-auction-process/)
![Close-up of intricate mechanical components symbolizing a robust Prime RFQ for institutional digital asset derivatives. These precision parts reflect market microstructure and high-fidelity execution within an RFQ protocol framework, ensuring capital efficiency and optimal price discovery for Bitcoin options.](https://options.greeks.live/wp-content/uploads/2025/07/engineered-core-systems-driving-institutional-digital-asset-derivatives-rfq-protocol-execution.jpg)

A surviving member's core legal obligation is the mandatory, compliant submission of a bid in a CCP's default auction.

- 
### [How Do CCPs Calibrate the Size of Their Default Funds?](https://options.greeks.live/question/how-do-ccps-calibrate-the-size-of-their-default-funds/)
![A dark, reflective surface showcases a metallic bar, symbolizing market microstructure and RFQ protocol precision for block trade execution. A clear sphere, representing atomic settlement or implied volatility, rests upon it, set against a teal liquidity pool. This depicts institutional-grade digital asset derivatives trading with high-fidelity execution and prime brokerage oversight.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-4.jpg)

CCPs calibrate default funds by stress-testing member portfolios to size a mutualized capital pool sufficient to cover the failure of its largest members.

- 
### [How Does the Default Waterfall in a Ccp Actually Transmit Risk?](https://options.greeks.live/question/how-does-the-default-waterfall-in-a-ccp-actually-transmit-risk/)
![A metallic disc, reminiscent of a sophisticated market interface, features two precise pointers radiating from a glowing central hub. This visualizes RFQ protocols driving price discovery within institutional digital asset derivatives. It highlights market microstructure dynamics, high-fidelity execution, and algorithmic trading strategies for capital efficiency and alpha generation in options trading.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-price-discovery.jpg)

A CCP's default waterfall transmits risk by mutualizing losses to surviving members after a defaulter's resources are exhausted.

- 
### [How Do CCP Default Waterfalls Actually Function during a Member Failure?](https://options.greeks.live/question/how-do-ccp-default-waterfalls-actually-function-during-a-member-failure/)
![A polished, abstract metallic and glass mechanism, resembling a sophisticated RFQ engine, depicts intricate market microstructure. Its central hub and radiating elements symbolize liquidity aggregation for digital asset derivatives, enabling high-fidelity execution and price discovery via algorithmic trading within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-engine.jpg)

A CCP default waterfall is a pre-defined sequence of financial resources used to absorb losses from a member failure, ensuring market stability.

- 
### [How Does a CCP’s Skin-In-The-Game Align Its Incentives with Market Participants?](https://options.greeks.live/question/how-does-a-ccps-skin-in-the-game-align-its-incentives-with-market-participants/)
![Stacked concentric layers, bisected by a precise diagonal line. This abstract depicts the intricate market microstructure of institutional digital asset derivatives, embodying a Principal's operational framework. It represents RFQ protocols for high-fidelity execution, ensuring liquidity aggregation and atomic settlement within a Crypto Derivatives OS.](https://options.greeks.live/wp-content/uploads/2025/07/multi-layered-digital-asset-derivatives-rfq-protocol-architecture.jpg)

A CCP's skin-in-the-game aligns incentives by making its own capital the first line of defense after a defaulter's, ensuring prudent risk management.

- 
### [How Does the Allocation between Initial Margin and the Default Fund Affect Clearing Member Incentives?](https://options.greeks.live/question/how-does-the-allocation-between-initial-margin-and-the-default-fund-affect-clearing-member-incentives/)
![A sleek, futuristic object with a glowing line and intricate metallic core, symbolizing a Prime RFQ for institutional digital asset derivatives. It represents a sophisticated RFQ protocol engine enabling high-fidelity execution, liquidity aggregation, atomic settlement, and capital efficiency for multi-leg spreads.](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-execution-engine-for-optimal-liquidity-aggregation-and-atomic-settlement.jpg)

The allocation between initial margin and the default fund calibrates the CCP's risk engine, shaping member incentives.

- 
### [How Does the Eu’S’Skin-In-The-Game’ Rule Alter Ccp Risk Management Incentives?](https://options.greeks.live/question/how-does-the-eus-skin-in-the-game-rule-alter-ccp-risk-management-incentives/)
![Abstract RFQ engine, transparent blades symbolize multi-leg spread execution and high-fidelity price discovery. The central hub aggregates deep liquidity pools. Red glows indicate real-time market microstructure dynamics and optimal capital efficiency for institutional digital asset derivatives block trades.](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-engine-for-crypto-derivatives-high-fidelity-block-trade.jpg)

The EU's 'skin-in-the-game' rule aligns CCP and member interests by making the CCP's own capital the first line of defense after a defaulter's assets.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does a Default Management Committee Differ from a CCP&#8217;s Internal Risk Management Team?",
            "item": "https://options.greeks.live/question/how-does-a-default-management-committee-differ-from-a-ccps-internal-risk-management-team/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/how-does-a-default-management-committee-differ-from-a-ccps-internal-risk-management-team/"
    },
    "headline": "How Does a Default Management Committee Differ from a CCP's Internal Risk Management Team? \u25b4 Question",
    "description": "A CCP's internal risk team engineers the ship for storms; the Default Management Committee is convened to navigate the hurricane. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-a-default-management-committee-differ-from-a-ccps-internal-risk-management-team/",
    "datePublished": "2025-08-02T13:25:18+00:00",
    "dateModified": "2025-08-02T13:25:19+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-protocols.jpg",
        "caption": "A sophisticated digital asset derivatives trading platform, embodying a high-fidelity execution management system. Its prominent sensor enables precise price discovery and pre-trade analytics, while visible internal components underscore robust algorithmic trading and low-latency order book dynamics. This system exemplifies an institutional-grade Prime RFQ, designed for capital efficiency and best execution across RFQ protocols, ensuring optimal multi-leg spread trading and mitigating counterparty risk through advanced clearinghouse functions."
    },
    "keywords": [
        "Bank for International Settlements",
        "CCP Risk Management",
        "Central Counterparty",
        "Clearing Member",
        "Clearing Member Default",
        "CPMI-IOSCO",
        "Default Auction",
        "Default Fund",
        "Default Management",
        "Default Management Committee",
        "Default Waterfall",
        "Defaulter Pays",
        "Financial Market Infrastructure",
        "Initial Margin",
        "Internal Risk Management",
        "Loss Mutualization",
        "Management Team",
        "Risk Management",
        "Stress Testing"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "FAQPage",
    "mainEntity": [
        {
            "@type": "Question",
            "name": "What Is The Core Jurisdictional Boundary Between The Two Entities?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The jurisdictional boundary is defined by the state of the system. The internal risk management team's jurisdiction is the \"peacetime\" operation of the CCP. They govern the rules of engagement, set the required level of defenses (margin, default fund contributions), and monitor the entire battlefield of cleared transactions for signs of weakness or concentration. Their authority is derived from the CCP's rulebook and is exercised through automated calculations and periodic reviews. They recommend changes to margin models, advise the board on risk tolerance, and ensure the CCP operates within the stringent guidelines set by regulators like CPMI-IOSCO."
            }
        },
        {
            "@type": "Question",
            "name": "How Does A Default Management Committee Execute Its Mandate?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The execution of a default management plan is a high-stakes, manual process that follows a clear, auditable playbook. While the plan is pre-defined, its execution requires significant judgment from the DMC members. The following steps represent a common operational flow for a default."
            }
        }
    ]
}
```


---

**Original URL:** https://options.greeks.live/question/how-does-a-default-management-committee-differ-from-a-ccps-internal-risk-management-team/
