Editing Openai/68ed2ed1-5644-8004-ba30-42213bf3dbfa (section)

==== 🏗️ 2. What’s changed since then (on paper) ====

After LTCM, and especially after 2008, regulators built some “shock absorbers”:
# Central Clearinghouses (CCPs): Most standardized derivatives (interest rate swaps, credit default swaps, etc.) must now go through a CCP. That means instead of JPM and Citi owing each other directly, they each face the clearinghouse — which nets out and manages collateral centrally.
# Daily Margining: Losses are settled every day through variation margin, reducing the buildup of unrecognized risk.
# Capital & Liquidity Rules: Basel III forced big banks to hold far more capital against derivative exposures. So the balance sheet shock you described with LTCM is theoretically buffered.
# Resolution Frameworks: There are now “living wills” and orderly liquidation mechanisms so a single institution can fail without freezing the entire system (in theory).