Covered bonds get carve-out in draft EU clearing rules

Issuers pleased as Esma proposes exemption for covered bond hedges

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European regulators today proposed a clearing carve-out for covered bond derivatives, so long as six conditions are satisfied - potentially ending issuers' long-running fears that they would be required to clear their trades. The covered bond industry had agued it would be difficult or impossible to make initial and variation margin payments if it was caught by the clearing regime.

The six conditions mirror those set out in draft margining rules for non-cleared trades in April, so are not a huge

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