Credit Risk USA: Direct buy-side clearing 'not feasible'

Added cost and mutualised risk will discourage direct clearing participation, panel concludes

clearing and settlement

Buy-side firms are unlikely to join over-the-counter clearing houses directly because of additional risks and expense – particularly the need to contribute to a central counterparty's (CCP's) default fund – according to speakers at the Credit Risk USA conference in New York on Tuesday.

During a panel discussion, representatives from clearing banks and derivatives end-users concluded that, although new rules lower the bar for entry in an attempt to encourage broader CCP membership, buy-side firms

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