Assessment Rights

Assessment rights are the contractual powers granted to a clearinghouse to demand additional capital contributions from non-defaulting clearing members in the event that the default fund is exhausted. This is often the final stage of the default waterfall, representing an extraordinary measure to prevent the clearinghouse from becoming insolvent.

When these rights are triggered, members may be forced to provide liquidity to cover the remaining losses of the defaulting party. This mechanism effectively mutualizes the risk across the entire member base.

While it provides a crucial safety net for the market, it also introduces significant uncertainty for participants who may face unpredictable financial liabilities. It serves as a deterrent against excessive risk-taking by individual members.