Push, ping or hub: industry tackles risk of clearing fails

Push, ping or hub

Nathan Ondyak

When a company executes an over-the-counter derivative subject to a clearing mandate, it will face a brand-new risk – that the trade will not complete the journey to a clearing house. If that happens, the transaction would be illegal and, unless a remedy could be found, it would need to be terminated just minutes or hours after it had been executed – which could be costly in fast-moving markets, especially if the trade had already been hedged with another, offsetting transaction.