SEC slammed for CDS cross-margin hurdle

CDS users face collateral hike because SEC rule means clearing members are not yet able to offer CDS cross-margining to their clients – but there are hopes of a last-minute exemption


The first clearing mandates come into force in the US in a few days, on March 11 – but buy-side firms are concerned they may be hit by huge collateral calls because of a Securities and Exchange Commission (SEC) rule that prevents clearing members from offering cross-margining on single-name and index credit default swap (CDS) trades to their clients.

The first clearing mandates cover swap dealers, major swap participants and active funds, but while clearing members of credit derivatives central

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