The clearing revolution

The clearing revolution

michael-faulkner

New rules on over-the-counter derivatives are set to have a significant impact on the insurance industry. The rules, the European Market Infrastructure Regulation in Europe and the US Dodd-Frank Act, will require certain OTC derivatives to be centrally cleared and high-quality collateral posted upfront and during the contract to cover counterparty exposure. Insurers, as significant users of derivatives to hedge risk, will need more high-quality assets – cash or liquid securities –