The Risk Controllers: Central Counterparty Clearing in Globalised Financial Markets

22

Reflections and Conclusions

This book has followed the development of central counterparty clearing through a great arc of history, concluding in Asia, the region where the harbingers of today's CCPs emerged 280 years ago to clear rice futures contracts.

When the clearing houses of Osaka took responsibility for completing futures trades in the Dojima Rice Market in the decades following 1730, Asia was where most of the world's economic activity took place.

In 1750, before the industrial revolution, China accounted for nearly a third of world manufacturing output – some 40% more than the share of all Europe at the time and around twice China's share of about 16% today – while the Indian sub-continent accounted for a further quarter. Japan's share of global manufacturing output in 1750 was an estimated 3.9%, twice that of Britain in pre-industrial times and nearly 40 times the share of a string of colonies in North America that went on to found the United States.¹

So with Asia growing strongly and reclaiming some of the economic power that it ceded to the west during the industrial revolution, it seems only logical to expect that growth and, with that, innovation in clearing will gravitate eastward.

Such a shift in today's globalised world would fit the patterns outlined in this book. It was as Europe and the US grew in economic power during the late 19th century that enterprising brokers and merchants set up futures markets, supported by clearing houses, to maximise the benefits ...