Clearing banks feel pinch as rates turn negative

Negative returns on dollar deposits at Eurex, Ice and LCH spur talk of business model change

Rate cuts and bond-buying by the Federal Reserve might have insulated the global economy from the worst impacts of the coronavirus – but it’s done little to help the business model of futures commission merchants. Compressed rates around the world are putting the squeeze on clearing firms, as the dollars they deposit at central counterparties start to earn negative rates, prompting many to talk openly of a fundamental revaluation of the economics of clearing.

“If you don’t want to lose heaps of

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Calibrating interest rate curves for a new era

Dmitry Pugachevsky, director of research at Quantifi, explores why building an accurate and robust interest rate curve has considerable implications for a broad range of financial operations – from setting benchmark rates to managing risk – and hinges on…

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