A Central Counterparty (CCP) is a financial institution that acts as an intermediary between buyers and sellers in a market. By stepping in to guarantee the completion of trades, a CCP reduces the risk of default by either party. This helps to enhance market stability and confidence, especially in complex financial transactions. CCPs are commonly used in various markets, including derivatives and securities. They manage the clearing and settlement processes, ensuring that trades are executed smoothly. By centralizing these functions, CCPs help to streamline operations and improve transparency in financial markets, benefiting all participants involved.