Equity swaps clearing plans divide industry

Moves by CCPs to clear equity swaps leave market deeply divided

eric-litvak
Eric Litvack, Societe Generale Corporate & Investment Banking

Dealers in the equity derivatives market are facing a huge problem. A host of balance sheet constraints on their equity finance desks – from bank levies in the UK and other European countries to the various iterations of the leverage ratio – are restricting their ability to offer instruments such as total return swaps (TRSs) to clients in the scale they previously enjoyed.

There is an obvious, though for some, unpalatable solution at hand to ease the crunch: push some of the more standardised

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