CFTC urged to rethink rules that threaten cross-margining

In a world where central clearing and bilateral collateral posting are mandatory, margin efficiency will be a big draw, and one obvious way to achieve it is through cross-product margining. Unfortunately, it is difficult to achieve – and Commodity Futures Trading Commission proposals could make it impossible. By Matt Cameron

Dave Olsen
Dave Olsen

Cross-product margining is a cumbersome term that matters for a simple reason – it makes it cheaper to use a clearing house – and since politicians first considered mandating the use of central clearing for over-the-counter derivatives, it has been invoked by dealers to console their clients. Using central counterparties (CCPs) wouldn’t be so bad, they said, because the dealer could look at its uncleared trades with a client, then take into account offsets on trades cleared via its futures

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Switching CCP – How and why?

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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