Clearing

When It Comes to Clearing, Go Big or Go Home

There are a lot of OTC derivatives clearing providers screaming for recognition in the marketplace, but nothing speaks louder than true industry validation. DerivAlert: When It Comes to Clearing, Go Big or Go Home.

Clearing the Way for Profit

OTC derivatives reform on both sides of the Atlantic has caused industry upheaval, with market participants scrambling to ensure that they are fully compliant with all relevant rules and regulations ahead of the various deadlines. Rule Financial: Clearing the Way for Profit.

CCPs Gain Traction in Europe

The use of central counterparties for funding collateral has increased according a survey by the European Central Bank ahead of mandatory clearing being introduced in the region. Markets Media: CCPs Gain Traction in Europe.

Nasdaq OMX – Your First EMIR Authorised Central Counterparty

Nasdaq OMX was the first organization to be approved as a central counterparty under EMIR. The firm answers the key questions behind the process: Why, What, How and What next? Tabb Forum: Nasdaq OMX – Your First EMIR Authorised Central Counterparty.

Asia Clearing Mandates to Go Live Before European and US Regulators Approve CCPs

Several Asia markets are set to mandate central clearing but European and US banks face the dilemma of whether to join onshore CCPs before they receive approval from their domestic regulators – potentially leaving them exposed to onerous capital charges. Risk: Asia Clearing Mandates to Go Live Before European and US Regulators Approve CCPs.

End-users Say Non-cleared Margin Rules Will Hit Hedging

Dramatic increase in margin on uncleared swaps will reduce end-user hedging ability, says US insurer. Risk: End-users Say Non-cleared Margin Rules Will Hit Hedging.

Clearing Costs Creep Up for Clients

Some futures commission merchants are raising fees for clearing and collateral transformation services, buy-siders say. Risk: Clearing Costs Creep Up for Clients.

CME Clearing Europe: Scale Will Count, Says Betsill

The new head of CME’s European clearing business expects competition to be intense as the region heads towards the start of mandatory clearing, but he believes his firm has a winning hand. Risk: CME Clearing Europe: Scale Will Count, Says Betsill.

EU Watchdog Proposes Breathing Space on Derivatives Clearing

May 8 (Reuters) – Banks would not have to clear some of their derivatives transactions during the roll out of new rules aimed at making markets safer under a proposal put forth by a top European Union regulator on Thursday. Reuters: EU Watchdog Proposes Breathing Space on Derivatives Clearing.

Collateral Management

Segregation of Initial Margin: Buy Side Elections are Coming Soon. Will It Impact Swaps Pricing?

Last week we wrote about the recent ISDA margin survey and the rehypothecation of collateral. We noted that 99% of the cash & 85% of government securities received as margin on non-cleared swaps was eligible for rehypothecation and that 87% and 45%, respectively, was actually used. There is more to the story, as explained in an April 19th post from the Harvard Law School Forum on Corporate Governance and Financial Regulation “Segregation of Initial Margin Posted in Connection with Uncleared Swaps”. Securities Finance Monitor: Segregation of Initial Margin: Buy Side Elections are Coming Soon. Will It Impact Swaps Pricing?

Collateral Optimisation Strategies Come to the Fore

Almost a year on from the start of mandatory central clearing in the US, buyside funds are shifting their attentions towards optimising their collateral functions to alleviate the burden of posting billions of dollars worth of margin against cleared derivatives trades. IFR: Collateral Optimisation Strategies Come to the Fore.

Collateral Managers Weep, Lawyers Rejoice: EU Consults on Non-cleared OTC Derivatives

The ESA recently published a consultation paper on the draft RTS on risk-mitigation techniques for non-cleared OTC derivatives.  Michael Beaton of DRS explains the main elements of this new consultation paper including the proposed requirements for counterparty risk management procedures, margin methods, collateral eligibility and related operational procedures. DerivSource: Collateral Managers Weep, Lawyers Rejoice: EU Consults on Non-cleared OTC Derivatives.

Euroclear, DTCC to Set Up Collateral Joint Venture

Depositary Trust & Clearing Corp. and Euroclear Bank SA, two of the world’s largest settlement firms, are creating a joint venture to process collateral as banks globally struggle to find enough capital to back their trades. Bloomberg: Euroclear, DTCC to Set Up Collateral Joint Venture.

Optimising the Use of Collateral | White-paper from Collateral World Advisory Board

With cleared derivatives set to require between $0.5tn and $2.6tn of additional collateral, buy and sell side firms are increasingly looking for ways to lower their costs and monetise their collateral. The OTC Space: Optimising the Use of Collateral | White-paper from Collateral World Advisory Board.

The Impact on Collateral Operations | Risk & IBM Survey

Risk magazine sponsored by IBM conducted a global survey from 28 February until 27 March 2014, polling 130 Sell & Buy Siders in a first effort to enlighten us a bit more on where industry stands with its preparations with regards to the upcoming margin regime for non cleared OTC Derivatives, expected to be implemented in phases between 2015 and 2019. 

• The OTC Space: The Impact on Collateral Operations | Risk & IBM Survey
• Risk: Collateral and Counterparty Tracking: Emerging Initial Margin Requirements.

Free Webinar: Buy Side Collateral Management – Challenges and Opportunities

The free webinar by 4Sight and Rule is on next week, covering many aspects of how to implement an effective credit risk reduction programme using collateral management. The OTC Space: Free Webinar: Buy Side Collateral Management – Challenges and Opportunities.

CME Clearing Europe to Offer Collateral System With SIX

CME Group Inc. (CME)’s European clearinghouse and SIX Group’s central-securities depository have agreed to offer an integrated collateral-management service to insurance companies operating in Switzerland. Bloomberg: CME Clearing Europe to Offer Collateral System With SIX.

Risk Management

Indemnification: The Not So Hidden Costs

Agent lenders have traditionally provided an indemnification to their securities lending clients to protect them against counterparty default. Rule Financial: Indemnification: The Not So Hidden Costs.

Intra-day Risk Management Needs Clear Data, Conference Hears

Risk decisions and data volume means data needs to be understood across organisations. Risk: Intra-day Risk Management Needs Clear Data, Conference Hears.

Buy Side Urged to Share Risk of CCP Collapse

Clients – not just banks – should be exposed to the risk of a clearing house collapsing, according to BlackRock and Citadel. Risk: Buy Side Urged to Share Risk of CCP Collapse.

FCM Models for CDS Portfolio Margin "Varied Widely"

Finra says year-long approvals process revealed "notable outliers". Risk: FCM Models for CDS Portfolio Margin "Varied Widely".

Trafigura Paper Reignites Debate on Systemic Risk

Commodity trading houses "are not too big to fail" argues white paper published by Trafigura, attracting mixed views from market observers. Risk: Trafigura Paper Reignites Debate on Systemic Risk.

Basel Exposure Limits Raise Questions for Client Clearing

If clearing members are deemed to be interconnected, banks that use them to access a CCP may run into problems with the Basel Committee's new counterparty exposure regime. Risk: Basel Exposure Limits Raise Questions for Client Clearing.