Covered bond issuers cheer EU swaps margin relief

Regulators recognise collateral posting barriers but set six conditions for an exemption

money-houses
Covered bond pools only have homes as collateral

Issuers of covered bonds have welcomed European proposals that would exempt them from the need to collateralise non-cleared swaps – a safe harbour that international regulators did not include in their own standards on bilateral margining that were finalised last year.

"This is a good thing for the industry. It acknowledges the special status of covered bonds and the problems pools have with posting collateral. So this proposal gives the market clarity and is a move in the right direction," says

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