Growth of booking entities seen as swap liquidity threat

Cumulative capital impact will weigh on big market-makers, academic warns

USA

The growing use of affiliates and subsidiaries in over-the-counter derivatives market-making could harm swap liquidity, a leading academic has warned.

Addressing delegates at Risk’s OTC Derivatives Clearing Summit in New York yesterday, Ronald Filler, professor of law at New York Law School and a former managing director at Lehman Brothers, said the cumulative regulatory capital requirements global dealers will face across their various subsidiaries will drain liquidity out of swap markets.

“Whe

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