Ups and downs

Seen as a simple solution for reducing counterparty risk by regulators, moving credit derivatives on to central clearing platforms is proving fiendishly complicated. While progress is being made, it is generating more questions than answers. Mark Pengelly reports

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Credit derivatives have been continuously targeted for operational improvements over recent years. Since 2005, the Federal Reserve Bank of New York has exchanged a flurry of letters with major dealers requesting the tidying up of confirmation backlogs, as well as same-day processing and settlement of credit default swap (CDS) trades. Now, with concerns about systemic risk looming large, both the New York Fed and European Commission (EC) are pushing dealers towards an endgame: central clearing

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As uncertainty surrounding Brexit continues and the impacts of Covid-19-driven market volatility are analysed, it is essential for banks and their end-users to understand their clearing options, and how they can achieve greater capital and cross…

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