A gilt repo trader at one LCH member bank said it will allow for more effective netting – the reduction of offsetting obligations to a single 'net' obligation. “If you have the ability to net-down more, then you can do more trades,” said the trader.
Burke added that member banks' capital requirements could also be reduced. “If you have 40 counterparties that you have to allocate cover against, and if you replace that with just LCH, you get a saving.”
The week on Risk.net, November 17–24, 2017Receive this by email