Assessment Powers

Assessment powers are the authority of a clearing house to demand additional contributions from its members to replenish the default fund after it has been partially or fully depleted. This mechanism provides an extra layer of financial protection beyond the initial default fund.

If a large default occurs and consumes the existing pool, the clearing house can call upon the surviving members to provide more funds to cover the remaining loss. This ensures that the system remains solvent and can continue to clear trades.

While it provides stability, it also represents a potential risk to members, who may be forced to pay significant sums during a market crisis. The extent of these powers is defined in the clearing house's rules and legal agreements.

It is a key element of the mutualized risk structure. Members must account for this potential liability in their own risk management models.