Wider clearing scope will create risk, warns Goldman exec

If clearing mandates are expanded to include less-liquid products, the market will struggle to provide hedges in the event of a dealer default, conference is told

sea of dollar bills disappearing into a vortex

Regulators will create systemic risk if they expand the range of over-the-counter derivatives that is required to centrally clear, according to Oliver Frankel, managing director for derivatives risk at Goldman Sachs. The smaller pool of dealers that trade less-liquid products may not be able to absorb the risk resulting from the default of a rival, he argued at yesterday's Quant Congress Europe conference in London.

"Clearing products beyond which the market can provide hedging liquidity for in

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