Image
August 1, 2013

Uncleared swaps and higher initial margin; can a margin clearing mechanism reduce the pain? | Securities Finance Monitor

Commentary by SFM on a piece in IFR about the idea of processing OTC products in a non-CCP centralised platform with net margin.

If there is a way to net margin requirement outside of a CCP environment, it could take a lot of pressure off. There are lots of unanswered questions. How are prices determined to mark the derivatives to market, which then flow down to margin surplus or deficit? If these were easily available / transparent prices, wouldn’t the derivatives probably be cleared? How would liquidation work in a default environment? Who gets what & when is hard enough in a CCP – but a margin clearing house, presumably without guaranty funds and risk waterfalls will be very tricky.

via Uncleared swaps and higher initial margin; can a margin clearing mechanism reduce the pain? | Securities Finance Monitor.


Popular
Most Viewed

Image

Related Articles


June 30, 2022

SIMM Falls Short says PRA Letter to Banks




2 MIN



Risk Management


June 28, 2022

FMSB Statement of Good Practice on Trading Platform Disclosures




2 MIN



Regulation


June 20, 2022

Regulatory change and data fragmentation are key challenges for 85% of firms




2 MIN



Regulation