Dealers warn of risks of forced allocation in OTC clearing
Clearing houses could cause large losses for their members if they don't put limits on portfolio allocation, dealers think.
Major derivatives dealers are worried the default of a clearing member of a central counterparty (CCP) could result in large losses for the other members if the auction process fails.
Most CCPs would use an auction-like process to sell off a defaulting dealer's portfolio in an organised way, but dealers worry about what would happen if the auction failed to shift the entire portfolio. That
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