Constraints on banks' capacity in the repo market are threatening to cut off a key source of the cash that pension funds require for variation margin under incoming central clearing rules. In response, central counterparties and brokers are putting forward ways to assist.
Several central counterparties (CCPs), for example, are working on plans to enable the buy side to clear repo directly. One CCP has plans to act directly as a counterparty with pension funds. And interdealer broker Tradition is